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АSTANA, December 1 (Itar-Tass) — The Customs Union (CU) member-countries must raise the competitiveness of their economies and reduce non-productive costs so as to mitigate the consequences of a global financial downturn, Gherman Gref, Chairman of the Board of the Sberbank (savings bank) of Russia said at an economic forum here on Thursday.
"It is essential (for them) to straighten things out in their economies, inside the CU, and get prepared for a sharp reduction in costs at all enterprises," Gref pointed out.
Gref said a deterioration of the international economic situation would be relayed to the CU via two channels. The first one is the cost of raw materials. "Our economies must be readied to realize that a decline in oil prices will come about sooner or later," Gref maintains.
The second channel is a complication of the situation on the global financial markets. Such a complication would be conducive "to a reduction in the influx of foreign investments" and a rise in the price of external borrowings. "First of all, financial instability affects maybe the most potential and at the same time most risk-prone markets, to which we belong," he said.
In this connection, Gref's opinion is that in view of a global downturn "We all would have to encounter a high volatility and the need for a certain period of time to artificially maintain our competitiveness and the level of employment so as to endure maybe a long-enough period of decline in the volume of production and in the prices of the output of enterprises". His forecast is that "We shall see this kind of decline in both the construction sector and machine building soon".
"As of now, the most correct thing we may do is to reduce all our common non-productive costs," Gref emphasized.