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Kudrin predicts 3-4 percent slowdown for Russian economy in 2013

June 23, 2012, 17:54 UTC+3

However, the ex-minister believes that such a fall was inevitable for cyclic economic development

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ST.PETERSBURG, June 23 (Itar-Tass) —Russian ex-finance minister Alexei Kudrin predicts a 3-4 percent slowdown of the Russian economy in 2013.

“The probability is great that it’s likely to happen next year,” Kudrin told journalists on the sidelines of the International Economic Forum in St. Petersburg on Saturday.

However, the ex-minister believes that such a fall was inevitable for cyclic economic development.

He said the real crisis would start if the GDP fell lower than 3 or 4 percent. The fall was 7.9 percent during the previous crisis. According to Kudrin, anti-crisis measures should be introduced only if the GDP starts dwindling by 3 or 4 percent in annual expression.

“Until that moment we should keep the reserves untouched,” Kudrin went on to say.

He also insists that the government should work out a scenario if oil prices stay at 60 dollars per barrel in the next few years.

Kudrin said that with a new wave of crisis looming, the government shouldn’t raise expenses on the one hand, but should go ahead with programs that have already been launched, on the other hand.

The Russian ex-finance minister said on Saturday that some participants in the International Economic Forum in St. Petersburg were underestimating the danger of a second wave of crisis.

Kudrin said that a serious discussion of key global problems had taken place at the forum. “At the same time, the situation in the global economy is much worse than it was estimated. The mechanisms of a second wave of crisis have been launched. Europe will face a recession this year,” the Russian ex-finance minister added.

“A rescue program ought to have been taken to save the European economy. There’s no program and there are no decisions while the crisis is entering a very complicated stage. The crisis is gaining momentum at such a pace that it will be impossible to soften its consequences no matter how many funds we are going to invest,” Kudrin warned.

He believes that Spain’s banking sector will be a major problem for the euro area in the next two or three months. The Spanish population has already started withdrawing money from their deposits. EU subsidies won’t be enough to save Spanish banks.

“One hundred billion euro is certainly not enough. Additional measures, both monetary and organizational, interaction mechanisms and possibly additional guarantees are needed. In short, deposits should be insured,” Kudrin stressed.


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