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Putin to hold meeting in Sochi to discuss economic situation

April 22, 2013, 7:09 UTC+3

The meeting will discuss in detail the economic situation in the country and outline a plan of actions if the economic conditions worsen

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MOSCOW, April 22 (Itar-Tass) - Russian President Vladimir Putin will hold a meeting in Sochi on Monday to discuss prospects for Russia's economy with the current trends taken into consideration.

The meeting will discuss in detail the economic situation in the country and outline a plan of actions if the economic conditions worsen.

Prime Minister Dmitry Medvedev, First Vice-Premier Igor Shuvalov, Deputy Prime Minister Arkady Dvorkovich, Finance and Economic Ministers Anton Siluanov and Andrei Belousov and Chairman of Bank of Russia Sergei Ignatyev are expected to participate in the meeting.

In April, the Ministry of Economic Development lowered the economic growth forecast for 2013 from 3.6 percent of the GDP to 2.4 percent. Inflation for the year, according to the ministry's forecast, will rise to 5.8 percent, instead of earlier expected 5.6. Investments in the main capital, according to the new forecast, will amount to 4.6 percent.

The oil price is expected to stand at 105 dollars a barrel with a following decline to 100 dollars in 2013.

Belousov believes that a recession may be expected, if no economic stimulating measures are taken. “We are not in a recession for the present, but may get there. There is such a risk," the minister noted.

According to the Itar-Tass information, mainly the presidential administration prepares for the meeting. But the government has a plan of action in case of sharp worsening of the situation.

Shuvalov said the cabinet did not support the idea to increase inflation for an economic growth. "We hope that over the year the control figures for inflation will not be bad," he said, noting that curbing of inflation was the government's priority. The first vice-premier did not describe the economic situation as unexpected. At the same time, he noted that the government should not immediately react to it. "There should not be an immediate reaction," Shuvalov said.

The president's economic advisor Elvira Nabiullina believes the economic growth this year may be higher than the Economic Development Ministry's forecast -- within 3-4 percent. At the same time, she noted the economy was lower than the potential growth.

In her view, to implement the plans to have five percent, accelerated institutional reforms are needed. Nabiullina, who will take the post of head of the Central Bank next June, also believes the government must continue the efforts to bring inflation under control. The policy to lower inflation, inflation targeting, remains important, she said, noting that inflation was rather high.

The fact that interest rates are high leaves an area for manoeuvring, if suddenly the situation worsens, she said.

"In my view, problems of economic growth are first of all in the investment climate and the economy structure,” she noted.

According to Nabiullina, to lower the dependence of Russia's economy on oil, there are no other ways, but its diversification through the improvement of investment climate, the use of the budget rule and the development of the financial market. It is a future mandate of the Central Bank. "Our financial market is poorly developed now. If we look at the capitalization of the market of shares -- it is some 40 percent of the GDP. It is a rather low rate, she said.

Ex-finance minister Alexei Kudrin's forecast coincides with Nabiullina's view. He believes Russia will avoid a recession this year -- the growth will be about three percent. Proceeding from this year's results, a forecast for the next year should be made, Kudrin noted.

He said the situation in the United States and the euro zone had a negative effect on Russian economy. One of the main problems, in his view, is high inflation. It locks low credit rates for a specific sector, Kudrin explained, recalling that a year ago, inflation was 3.7 percent as compared to the previous year, and now it is seven percent. It is .indicative of the weak monetary and credit policy and other actions, not always consistent, of the state.

At the same time, Kudrin noted no money should be added to the economy. Otherwise, it may worsen the situation with the index of consumer prices.

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