ST PETERSBURG: President Vladimir Putin unveiled a $13.6bn investment plan yesterday to build roads and railways across Russia and show he is not steering the country into political and economic stagnation.
But in a speech setting out moves to curb inflation, boost economic growth and sack the heads of under-performing state firms, he failed to allay investors’ concerns over an economy sliding towards recession.
Putin was less upbeat than in previous years at the forum, which is meant to show why Russia is a good place to invest. He acknowledged the economy faced problems a year into his third spell as president and 13 years after he first took the helm.
“There is no magic wand which could change the situation with one wave,” he said, declaring the era of high revenues from oil exports over.
Setting out distant projects reminiscent of the five-year plans of the Soviet era, he promised to plough 450bn roubles ($13.6bn) into building a new ring road outside Moscow, updating the Trans-Siberian railway and building a rail link from the capital to Kazan in central Russia. Moves to improve infrastructure, some of which has improved little since Soviet times, are considered vital by investors to modernise Russia and make its economy more competitive.
But with inflation running at an annual rate of 7.4 percent and economic growth now forecast to be 2.4 percent this year, below Putin’s 5 percent target, investors are concerned Putin is not the man to lead the economic recovery.
“There is a concern that Russia is potentially in some Brezhnev-style stagnation,” said Charles Robertson, chief economist at investment banking firm Renaissance Capital, referring to the Soviet leader Leonid Brezhnev.
“Now the energy prices are stagnating as they did in the late 1970s and the early 1980s, and now maybe reforms are petering out. Maybe politics is a part of the problem,” he added.
Last year Putin, 60, faced the biggest protests since he was first elected president in 2000. The rallies have dwindled but critics accuse Putin of cracking down hard on opponents to silence dissent and stifle democracy.
AFP
