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The president discussed with the ministers and experts a possible recession in Russia

April 23, 2013, 10:34 UTC+3
Putin demanded the Russian economy should be secured from negative fluctuations in the world economy as much as possible
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President Vladimir Putin held a meeting with the ministers and experts in his residence Bocharov Ruchei in Sochi on Monday over the threat of recession, the Nezavisimaya Gazeta daily reported. The Ministry of Economic Development finds this threat quite real. The Finance Ministry estimates the situation more optimistically. The state authorities blame external factors for the crisis.

Vladimir Putin demanded the Russian economy should be safeguarded from negative disturbances in the world economy as much as possible. “I expect concrete proposals on the measures, which will help us to ensure a stable economic growth, secure as much as possible from negative fluctuations in the world economy, reduce the risks of the decline in the production in the key industries and stimulate business activities,” the president stated.

“We should be ready that the decline in the production and crisis phenomena in the world financial system can affect and already affect our economy,” he said.

The newspaper recalled that the Ministry of Economic Development has reduced the main indicators of the economic development forecast in the previous week. Thus, the GDP growth was reduced from 3.6% to 2.4% in 2013, the industrial production from 3.6% to two percent, the investments in the fixed capital from 6.5% to 4.6%. Meanwhile, the minister warned about the risks for an outbreak of recession already in autumn 2013.

However, the president urged not to overdramatize the situation. “The Russian economy has a sufficient margin of safety. Many analysts noted that the economic growth should be restored in the second quarter. Today it is important to find how and thanks to what factors we can boost it, make the participants in the economic life more confident,” the president noted. Putin found unfeasible the idea to ‘propel’ the economic growth only thanks to the budgetary measures and to change the budget rule for this purpose. “To resolve the tasks not only budgetary measures are needed. We will face some risks if this budget rule is changed,” Putin noted.

The experts, whom the Nezavisimaya Gazeta daily polled, see external factors, which affect negatively the condition of the Russian economy, as well as internal factors. For instance, Vice-President of Delovaya Rossiya (Business Russia) Nikolai Ostarkov believes that the state authorities should not reinvent the wheel. To ward off the threat of recession, a promised tax manoeuvre should be made in order to lift the fiscal burden from the real sector of economy. In the view of the expert, the abandonment of the current development model, which is oriented at the raw material sector, high oil prices and the stimulating of the domestic demand though increasing the state expenditures, should follow the foresaid step.

Director of the Institute of Economics of the Russian Academy of Sciences Ruslan Grinberg estimated the outbreak of the recession as highly probable. The reason is in general apathy of the investors and consumers in Russia. Moscow makes a lucky exception. The state authorities have been speaking about the improvement of the investment climate already for 20 years and it is already high time to do something real for this purpose, he believes. The same situation has emerged over the reduction of the inflation rate. “We cannot do without massive state investments, no matter how bad we take the state presence in the economy. But the recession can be averted only this way,” Grinberg noted.

The president explained why the Russian economy is growing slowly, the RBC daily reported. This happens mainly due to the appetites of the state banks. They deprive the real sector of long-term and cheap money: at least eight percent above the inflation rate is set for risks and margin. The Kremlin intends to influence the situation and to redistribute the budgetary funds for the support of the economy in favour of Vladimir Putin’s election pledges - for the social sector and the infrastructure.

The newspaper noted that no reshuffle sensation took place at a meeting in Sochi, and former Finance Minister Alexei Kudrin was not called in the Kremlin. On Monday, the rumours arose that he may be appointed as a presidential aide for economy or the deputy head of the presidential administration. Kudrin arrived in Sochi as an expert, Russian president’s press secretary Dmitry Peskov said. “His report was no less convincing than other reports, but nothing more,” Peskov explained.

 

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