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Russia is heading for recession, experts believe

April 29, 2013, 11:57 UTC+3
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According to the Russian Economic Development Ministry’s data for the first quarter of the year, the Russian economy has no signs testifying to its recovery. Experts believe that recession is unavoidable and the Finance Ministry is ready to unblock the anti-crisis reserve of the budget of 200 billion roubles. However, even this will not help, experts say.

Russia's economy may plunge into the red as early as this autumn, believes Economic Development Minister Andrei Belousov who is quoted by the Komsomolskaya Pravda newspaper. The country's economy is like a steam engine that has run out of coal and it is moving by inertia, gradually slowing down. During 2012 the growth tempos were slowing down and in the first quarter of this year GDO grew by 1 percent. Problems had emerged back in January 2012, but it seemed then that they were only temporary: allegedly the New Year holidays and anxiety of businessmen ahead of the presidential election. However, last August a number of the RF economy sectors, including industry, agriculture, and even the ever trouble-free trade.

Russia’s economic growth is slowing down, and the RF government obviously has a deficit of ideas how to create new stimuli, writes the Nezavisimaya Gazeta newspaper. Last Friday, the RF Economic Development Ministry made public its monitoring for the first quarter, which contained not a single sign of the Russian economy recovery. “The general trend towards the deceleration of economic growth persists,” the ministry admitted. In the first quarter of the year the country’s GDP grew only by 1.1 percent, compared to the first quarter of last year. The quarterly dynamics at the same time testifies even not to the growth slowdown, but to economic downturn.

Neither sources nor signs of growth are so far observed in the Russian economy, the newspaper stresses. Perhaps, the only sector on which at least some hopes may be pinned now is the agricultural sector. In early April, HSBC Bank reported that it is agriculture that in the second half of 2013 may play the role of the driver - first of all thanks to the so-called low base effect, when after last year’s harvest reduction any improvement of the situation will be regarded as a “surge,” which, in turn, may somewhat accelerate economic growth.

In addition, the authorities hope to support the economy by means of reserve funds that will be used to finance the state programs and infrastructure projects of major companies.

Independent experts, however, do not hope that it will be possible to save the RF economy, which is currently mired in stagnation, from the future collapse. To all appearances, the recession is already inevitable and fatal, believes Director of the Strategic Analysis Department of the FBK company Igor Nikolayev. And even if the authorities correctly determine which anti-crisis steps should be taken, they will not be able to adequately implement them due to existing restrictions.

The Russian Finance Ministry in 2013 intends to unlock the budget’s bailout reserve worth 200 billion roubles, the Novye Izvestia newspaper writes. Finance Minister Anton Siluanov made this statement on Friday. According to him, 42 billion roubles of this amount will be redistributed for “more priority spheres.” The minister did not specify the spheres. Experts doubt that the money will be spent efficiently, but note that in the event of a real crisis, this sum would still be not enough for dealing with it.

Those 200 billion roubles in question - is the “emergency” money that can be spent urgently in the event of a sharp economic slump, the newspaper specifies. The RF Finance Ministry believes that this money will not be needed this year, as if something happens, the Reserve Fund’s money will be sufficient for the country.

The newspaper recalls that in 2012 the government had also reserved 200 billion roubles in case of crisis, but unfroze the funds in the middle of the year. However, this year is different from the previous, because the economy situation is worsening now. Slowdown of Russia’s economic growth had begun in the second half of 2012.


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