Russia to see out economic crisis in 2012: Putin

16th December 2010, Comments 0 comments

Prime Minister Vladimir Putin on Thursday gave an upbeat assessment of the Russian economy two years after the global economic crisis broke, saying he expected it to finally beat the slowdown in 2012.

In his annual question-and-answer session with Russians, Putin said Russia will post growth of 3.8 percent in 2010 and Gross Domestic Product (GDP) will see a return to pre-crisis levels in the first half of 2012.

"We are restoring the level of our GDP to the pre-crisis level," Putin said. "I think that in the first half of 2012, we will return to our pre-crisis level."

Russia's hydrocarbon-dependent economy was hard hit by the global economic crisis, suffering a 7.9-percent economic contraction in 2009 which reversed several years of stellar growth under Putin's leadership.

"We are finishing the year in an entirely satisfactory way," he said. "Ordinary people are already feeling a turn for the better."

Putin talked up the state of the Russian economy and the conditions of its ordinary citizens, saying it was on a par or even better than several European Union countries.

"If you compare us to Latvia or Romania we are not so different and it could be that we have it even better," he said.

Not everyone shares Putin's rosy view of the economy and this month Piotr Aven, the president of the private Alfa Bank, raised eyebrows by warning that the budget resembled that of the Soviet Union before its collapse.

Aven told the Financial Times that heavy state spending was creating a "very dangerous" situation for the budget.

Russia saw growth rates touching eight percent before the economic crisis but official forecasts are for more modest growth of 4.2 percent in 2011, 3.9 percent in 2012 and 4.5 percent in 2013.

Putin predicted a budget deficit of 3.5-3.8 percent percent of GDP in 2010, a stark contrast from the surpluses run in the pre-crisis days but still comfortable compared to the woes of some EU economies.

"This figure is much better than in many countries with so-called developed market economies," Putin boasted.

"When you have a deficit of 11 percent (of GDP) in Ireland, 13 percent in Britain, then 3.5-3.8 percent is a pretty good indicator."

Putin said that the authorities had feared a deficit of 6.8 percent of GDP earlier this year but the situation turned out "much better than we planned".

Nevertheless, some economists are worried by expected increases in defence spending, as Russia undertakes a major army reform, and the price of hosting the 2014 Winter Olympics and the 2018 Soccer World Cup.

Putin also warned that the agriculture sector would suffer as a result of the unprecedented heatwave over the summer, which forced Russia to controversially suspend grain exports.

He said agricultural production fell by 9.9 percent in 2010 while the grain harvest would be 60.5 million tonnes compared with 108 million tonnes in 2009.

"The drought made itself known," he said.

By contrast, industrial production will show growth of 8.5-8.6 percent in 2010, compared with a fall of 9.8 percent on 2009.

© 2010 AFP

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