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Putin says situation in Russian economy is disturbing but has enough margins of safety

April 22, 2013, 16:43 UTC+3
“Despite growing volatility on global markets, prices on oil and other resources are still rather high,” he noted
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SOCHI, April 22 (Itar-Tass) – Russian President Vladimir Putin has described the situation in the country’s economy as “disturbing,” but still having “solid margin of safety.”

Speaking at a government meeting on Monday dedicated to economic problems, the president cited official statistics showing a downward tendency in GDP growth. Thus, in the first quarter of 2012 Russia’s GDP grew by 4.8 percent, while in the fourth quarter – by only 2.1 percent. In the first quarter of 2013 GDP growth was a mere 1.1 percent. “As a result, the ministry of economic development has updated its economic growth forecasts for 2013 bringing then down to 2.4 percent despite the high prices of fuels,” Putin said. “The figure of 2.4 percent is less than in world economies. We haven’t had such situation for years.”

According to the president, these are “disturbing symptoms.” At the same time, he stressed that the Russian economy has good margins of safety. “Despite growing volatility on global markets, prices on oil and other resources are still rather high,” Putin noted. “Russia has substantial gold and currency reserves, its budget reserve funds are a reliable safety cushion. And what is most important, people’s real incomes are not shrinking but are steadily growing.”

He cited some analysts who forecast the resumption of economic growth in the second quarter of 2013. “And now it is vital to understand how we can encourage it, what means are to be used to inspire more certainty to economic players,” he said.

The president urged the government to report about what is being done to develop the transport and energy infrastructure. “We have said more than once that the lack of such infrastructure is a serious obstacle hindering further economic growth,” he stressed. In his words, long money is needed to encourage this sector. “I already asked to look at a possibility of long-term investing at the expense of the National Welfare Fund. The government agreed and was tusked to offer a relevant mechanism. Please report now about what has been done,” he said.

He also drew attention to growing risks that incomes of regions budgets might fall short of targeted indices. The topic of regional budgets, he reminded, was raised at a government meeting in Elista that focused on problems of re-settling people from ramshackle housing. The president stressed that all social obligations must be fulfilled. “No one has reversed such obligations and is not going to do it,” Putin stressed.


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