BLAGOVESHCHENSK: Russia’s economy is at risk of sliding into recession by autumn and the government may need to implement stimulus measures to shore up growth, Economy Minister Andrei Belousov said yesterday.
“We are not in recession for now, but we may get there — there is such a risk,” Belousov told reporters, a day after his ministry slashed its growth forecast.
“I think that, if by autumn we don’t see growth for some period, we may slide into recession.”
A year after Vladimir Putin returned to the Kremlin with calls for a “new economy” to boost investment and shake up state-run industries, Russia’s $2.1 trillion economy is close to stagnating.
The Economy Ministry on Thursday cut its growth forecast for this year by a third to 2.4 percent, which would be Russia’s worst showing since 2009, when the economy contracted sharply as a result of the global financial crisis.
Russia’s GDP grew at around one percent in the first quarter, weighed down by lacklustre investment and a decline in exports of strategic commodities such as natural gas that were hit by a slump in the European market.
The debt crisis in euro zone member Cyprus, a financial centre through which a quarter of Russian foreign investment and lending flows, has heightened concerns, meanwhile, that the Russian economy will be starved of capital.
Belousov’s warning is part of a debate over whether the economy needs monetary stimulus to boost growth nearer to the Kremlin’s target rate of five percent.
Putin’s choice to run the central bank, Elvira Nabiullina, has emphasised growth as a key policy goal and dialled back ambitions for reducing inflation.
Reuters
