Russian recovery fragile, picking up: IMF
Russia's recovery from deep recession remains fragile but appears to be picking up speed due to government efforts to boost private consumption, said the summary of an IMF country review on Monday.
“Following a deep recession, the Russian economy has improved but the recovery remains fragile,” the International Monetary Fund said, putting this year’s growth at 4.25 percent and 20011 at 4.0 percent.
The government forecasts growth of 4.0 percent for 2010.
The economy contracted a very sharp 7.9 percent last year as key energy exports were hit by the global economic slump, sending the country into a painful reverse after years of buoyant expansion.
The IMF said that after a dip early this year, “all components of demand now appear to be expanding, growth is becoming increasingly driven by consumption, reflecting to a large extent the recent 45 percent cumulative increase in pensions and other policy support.”
The reliance on such government stimulus measures, however, means that the public deficit remains high — at around 9.0 percent of gross domestic product at end-2009 — and above pre-crisis levels and Moscow’s own medium-term target.
In recent weeks, Moscow has drawn up plans for an ambitious 30-billion-dollar privatization drive, including stakes in some of the biggest companies, in a bid to balance the public finances.
Finance Minister Alexei Kudrin says that state sales planned for 2011-2013 will bring in 883 billion rubles for state coffers hit by the global economic crisis.
The IMF said Monday that Russia had benefited from the its oil stabilization fund built up before the crisis but now needed to keep spending under control in a period of likely slower economic growth.
To this end, the government should “begin now to gradually withdraw the stimulus and step up the process in 2011-12,” it said.
The IMF noted the importance of controlling inflation and welcomed progress achieved on banking supervision, while overall reform of the economy remains a key task in modernizing.
Moscow has worked hard to ensure Russia did not experience a repeat of the 1998 financial crisis, when the state defaulted on debt and the country’s economy went into meltdown.