MOSCOW: Russia’s economy chief said yesterday that the country had survived the worst of its sharp growth slowdown and was on the path toward cautious expansion in the coming year.
But the latest data yesterday showed that the economy grew by only 1.3 percent last year, less than half the 2012 performance.
And a precipitous ruble selloff that sliced seven percent off the currency’s value since the turn of the year and showed few signs of slowing down yesterday puts President Vladimir Putin under growing pressure despite the upbeat forecast.
Economy Minister Alexei Ulyukayev said he thought Russia’s $1.1-trillion economy had suffered its most dire phase in the fall of 2013 and that agriculture and industry were now both picking up steam.
“It seems to me that we passed the low point somewhere around the third quarter of 2013,” news agencies quoted Ulyukayev as telling a ministerial meeting.
“Promising symptoms are becoming visible of a gradual improvement in the situation,” the economy chief said.
Figures updated yesterday showed Russia’s economy expanding a hugely disappointing 1.3 percent last year — the second-worst performance since Putin became prime minister in 1999 and just a quarter of the Kremlin’s original target of five percent.
The economy grew by 3.4 percent in 2012.
Fitch Ratings yesterday attributed the slowdown to a “decline in investment and the inventory cycle” and forecast an expansion rate of 2.0 percent this year.
“A shrinking labour force and lack of structural reform constrain long-term growth,” Fitch Ratings said in a report.
Investor mistrust of Russia’s economic reform efforts contributed to the ruble being swept by a wave of currency depreciation that struck emerging markets at the end of last week.
The Russian currency — subject of two devastating post-Soviet devaluations that forced many to question the wisdom of market economics — was trading down 0.8 percent against the euro at 47.83 rubles and near its historic low.
The dollar was worth 35.31 rubles — also up 0.9 percent and once again approaching a five-year high it had set on Wednesday.
Russia’s Central Bank this year reduced the amount of its direct interventions on the market as it proceeds with the planned introduction of a fully-convertible ruble exchange rate by the start of 2015.
Its First Deputy Chairwoman Ksenia Yudayeva gave the Moscow market a further fright on Wednesday by telling The Wall Street Journal that stress tests showed Russian banks being able handle a 30-percent ruble decline.
Economists attribute a part of the ruble’s troubles to a deteriorating current account balance that is being hurt by a steady outflow of foreign investor cash.
Capital flight reached $63bn in 2013 and the government had hoped to see the figure shrink to $25bn this year.
But First Deputy Economy Minister Andrei Klepach said that investors’ recent turn against emerging markets could result in up to $35bn leaving Russia in the first three months of the year alone.
AFP
