PM: Russia armed to the teeth in face of global slowdown

2011-10-18 17:00:01

Russia has seen increases in its two reserve funds, which coupled with the Central Bank’s foreign exchange reserves means the country is ‘armed to the teeth’ in the face of a global economic slowdown, according to Prime Minister Putin.

With Chinese 3Q 2011 GDP data showing its weakest growth for 2 years, a continued stream of soft US data, and the prospect of the Eurozone fighting to work a way out of its sovereign debt and banking debacles, Russian GDP growth for the year is expected to come in at about 4%.

Russian Prime Minister Vladimir Putin has said in an interview with major Russian TV stations that although Russia will feel the impact of any global economic turn for the worse, he was looking to boost that figure to 6-7% within the coming years. He noted that although Russia’s safety margin was less than it was at the time of the 2008 crisis, the Russian government’s reserve fund will stand at about $55 million, with the National Prosperity Fund at about $90.6 billion.

"Those two reserve funds plus the Central Bank's gold and currency reserves make up quite a significant cushion."

He added that although Russia would not remain unaffected by any global downturn, the lessons learned during the previous crisis, coupled with its reserve position meant that Russia could soften any negative impact if it needed to.

"In general, taking into account the reserves and the experience gained during the 2008-2010 crisis, I'm confident that on the whole we are ready to face any challenge armed to the teeth."

The comments came amidst signs the Russian economy is slowing marginally, with the Central Bank seeing inflationary pressure easing and stating that it expected FY inflation of less than 7% – its lowest since 1991.But the Central bank also noted that consumer loans are continuing to grow strongly – up 19.6% for the year in August.

Russian industrial production growth slowed sharply to 3.9% in September according to official statistics, with the Economy Ministry reducing its FY forecast for industrial production from 5.4% to 4.8%.