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President Putin has tasked the government with working out measures to boost Russia’s economic growth.
He pointed out that the economic situation all around the world is facing challenges – in the EU, US and Asia-Pacific region.
Putin said that since Russia is tightly integrated in the global economy, it is exposed to those problems and these “worrying symptoms” make Russia vulnerable.
“We must be prepared for the effects that a drop in production and crisis signs in the global financial system could have on our economy. Some of these effects are already making themselves felt, as we can see… Economic growth started slowing down in the second half, above all due to a drop in export demand,” he said.
Putin has highlighted three major directions vital for the country’s economic stimulation in the meet yesterday.
He stressed that budget spending and changing the budget rules is not an option.
“It is clear that budget measures alone are not enough to resolve the tasks before us, and if we change the budget rules we would have some risks to face,” said the president.
Russia has recently introduced fiscal rules that tie spending plans not to projected oil prices, but to long-term average oil prices.
Putin has said that lack of Russian infrastructure development is hindering economic growth, especially in transport and energy sectors.
“There is often not enough long money for infrastructure development projects. I gave the instruction at one point to examine the possibility of long-term investments using funds from the National Welfare Fund,” he said.
Thirdly, he urged the government to look closely at the regions’ ability to meet their spending commitments, as their budget revenue will be less than planned.
“I expect to hear your proposals on this issue, your ideas on how we can meet the spending commitments – and I make it clear that these commitments remain in force and no one is going to annul them – without undermining the regions’ economic and financial situation,” Putin urged.
Russia’s economic development ministry has cut the country’s 2013 GDP growth forecast from 3.6 per cent to 2.4 per cent.
“Let me bring to your attention that a growth rate of 2.4 per cent is lower than the global economy’s growth rate. It’s been a long time since we were last in this situation,” Putin commented on Russia’s slowdown.
However, as Putin noted, “Russia’s economy is still quite solid overall,” with commodity prices remaining quite high.
Russia also has substantial gold and currency reserves, and budget reserve funds that provide a safety cushion.
“What is also very important is that people’s real incomes are not falling, thank goodness, but continue to grow, slowly, yes, but they are growing nonetheless,” Putin added.