Russian economy at risk from global crisis, says Putin

AFP/Moscow

President Vladimir Putin warned yesterday that the world economy was in crisis and its consequences risked hurting Russia’s performance just as the global slowdown did in 2008-2009.

Putin ordered Prime Minister Dmitry Medvedev to convene a special meeting of Kremlin and government advisers after worsening data prompted some officials to warn that Russia was nearing recession.

The Kremlin chief sternly cautioned that “the global crisis is obtaining ever more dangerous contours that will inevitably impact us, too.”

“This happened in 2008 and this is what we are witnessing today,” Putin said.

Russia’s economy contracted by nearly 10% in 2009 in the immediate aftermath of the global financial and economic crisis that began in 2008.

The country’s banks at the time betrayed their heavy exposure to dollar-denominated foreign loans that soared in value with the accompanying drop in the global price of oil and collapse in the value of the rouble.

Russia’s economy was saved from outright ruin thanks to tens of billions of dollars that the government quickly infused into the frozen banking sector and invested in badly struggling industries.

But the economic recovery that followed was slow and peaked at just half the rate of the nearly 8% growth recorded prior to the crisis.

The economy today is slipping back from even those rates following a disappointing 2012 in which growth came in at a modest 3.4%.

Russia’s economic ministry last week slashed its growth forecast for this year to 2.4 from 3.6% amid a slowdown in both industrial output and consumer demand.

Economic Minister Andrei Belousov followed that up on Friday by warning that quarterly growth could turn negative by the end of the year.

“We are not in a recession yet, but we could end up there,” Belousov warned.

“There is such a risk,” he noted. “I think it will happen in the autumn, if we fail to achieve growth.”

Putin instructed Medvedev to assemble an expanded meeting of Kremlin and government advisers that could come up with a list of recommended economic cures.