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Moscow should use anti-Russian sanctions to make economic advances — Putin

April 16, 2015, 18:38 UTC+3 MOSCOW
Instead of tolerating western sanctions, Russia should use them to reach new horizons of development, the Russian President said at an annual Q&A session
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Russian President Vladimir Putin

Russian President Vladimir Putin

© Mikhail Klimentyev/Russian presidential press service/TASS

MOSCOW, April 16. /TASS/. Economic issues topped the agenda of President Vladimir Putin’s annual question-and-answer conference on Monday, for which about 3 million questions from Russian citizens were submitted.

The Russian economy has seen many positive trends lately but negative factors are also present, Putin said.

"We were confronted with certain foreign economic restrictions and this affected our growth and our development in one way or another. But generally we see that the ruble is strengthening and stock markets are growing. We have managed to prevent an inflationary spiral," the Russian president said.

Russia’s budget deficit at 3.7% of GDP for 2015 is quite manageable, Putin said, adding the country had actually registered no industrial production decline in the first quarter of this year.

The Russian president said he expected a certain output decline in 2015 but the economy could recover in sooner than two years.

The Russian president said household incomes had decreased in 2014 and early 2015 as inflation had grown to 11.4% At the same time, the country’s GDP expanded by 0.6% in 2014, he said.

Russia has also been able to prevent a surge in the unemployment rate. "It is true that it increased. Last year, it stood at about 5.3-5.4% and now we have 5.8%," Putin said.

The Russian banking sector showed growth in 2014, with domestic banks’ assets reaching 77 trillion rubles ($1.5 trillion), exceeding the country’s GDP for the first time. The Russian banking sector showed good dynamics in 2014 despite "serious swings on the financial market."

Putin said that instead of tolerating western sanctions, Russia should use them to reach new horizons of development.

The Russian president also held a dialog at his Q&A conference with a former member of his team and now a moderate critic of his policy, ex-Finance Minister Alexey Kudrin.

The ex-finance minister asked the president a question about the correctness of the vector of Russia’s economic development.

"The first presidential term was characterized by an economic growth of 7% a year on average, although the oil price was about $30 per barrel. Now the average oil price is $70 per barrel while the economy grows by just 1.5% You have said the government is already making adjustments. But the old growth model has exhausted itself while no new model can be seen so far," Kudrin said.

The ex-finance minister inquired what the Russian president was ready to do to develop a new growth model.

Putin reminded Kudrin that the ex-finance minister had been one of the authors of the country’s development program until 2020.

"That is why, this is partly your and my fault," the Russian president said.

"Your colleagues say this is not enough and perhaps it is worth while cutting wages and reducing the retirement age as all these factors impede the economy’s development," Putin said.

"Theoretically, this is correct but if we want people to trust us, we also need to have a heart. Otherwise, as it seems to me, we may slide back into the situation of the 1990s and we’ll be forced to plug problems with an increasingly larger amount of money. In order to avoid this, we’ll go along the path proposed by the government and the Central Bank," Putin said.

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