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New wave of sanctions against Russia not to lead to recession — official

September 30, 2014, 20:39 UTC+3 MOSCOW
Russia's government will have to take measures next year to soften or partially limit the negative effect of sanctions and realize the potential of the Russian economy’s growth
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Deputy chairman of Russian state corporation Vnesheconombank Andrey Klepach

Deputy chairman of Russian state corporation Vnesheconombank Andrey Klepach

© ITAR-TASS/Vyacheslav Prokofyev

MOSCOW, September 30. /ITAR-TASS/. Deputy chairman of Russian state corporation Vnesheconombank (VEB) Andrey Klepach said Tuesday that there will be no recession in the country in 2015 if sanctions against Russia are not toughened.

“If there is another sanctions wave connected with restrictions for export of hydrocarbons, there could be recession. But I think that if the actual state of things is preserved, there will be no recession but the growth rates will turn out lower than the official forecast, lower than 1%,” Klepach told journalists.

He said the government will have to take measures next year to soften or partially limit the negative effect of sanctions and realize the potential of the Russian economy’s growth.

Speaking about forecasts of economic growth in 2014, Klepach said the figure could be lower than the official forecast (0.5% growth) and could total 0.3% or less. The negative effect will come from a more substantial reduction of investment in fixed capital than expected.

“Investment started shrinking before the sanctions. The Economic Development Ministry expected the negative tendency to change by the yearend. But now both due to the sanctions and cautious business policy, there is no investment growth,” he said.

“I think the investment decline in 2014 will be higher than the official forecast [2.4%] and total some 3% So economic growth, I think, will be 0.3% or lower,” Klepach said.

He said the government’s task in the current conditions, including by using mechanisms of National Welfare Fund money investment and by implementing import substitution measures is “not to lose next year”.

Russia came under Western sanctions, originally visa bans and asset freezes, for reunification with Crimea in mid-March after a coup in Ukraine in February. Later, Western claims that Russia is taking part in hostilities in southeast Ukraine, which Moscow has repeatedly denied, resulted in more serious, sectoral, restrictions.

In response, Moscow imposed on August 6 a one-year ban on imports of beef, pork, poultry, fish, cheeses, fruit, vegetables and dairy products from Australia, Canada, the EU, the United States and Norway.

The list of banned products includes cattle meat, pork, poultry meat and all poultry edible by-products, salted meat, pickled meat, dried meat, smoked meat, fish, clams and other water invertebrates, milk and dairy products, vegetables, edible roots and tuber crops.

It also contains fruits and nuts, sausage and analogous meat products, meat by-products or blood, as well as products made of them, ready-to-eat products including cheeses and cottage-cheese based on vegetable fats.

The European Union and the United States imposed the latest batch of sectoral sanctions against Russia on September 12 despite a deal on a ceasefire, signed in Minsk a week before, between Kiev and the self-proclaimed Donetsk and Lugansk People’s republics (DPR and LPR) in the embattled southeast of Ukraine.

According to UN data, clashes between troops loyal to Kiev and local militias in the Donetsk and Lugansk regions during Kiev’s military operation to regain control over the breakaway territories have resulted in about 3,500 deaths.

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