Wednesday June 24, 2009
MOSCOW: The Russian economy may contract by up to nine percent in 2009 if stimulus funds fail to reach their recipients, First Deputy Prime Minister Igor Shuvalov told Reuters in the gloomiest economic prediction for Russia to date. Economists polled by Reuters see the economy contracting by 4.9 percent in 2009 while the World Bank on Monday said the contraction may reach 7.5 percent.
Government officials earlier said they saw gross domestic product (GDP) falling between six and eight percent. "Maybe eight to nine percent. Maybe. But this is a pessimistic scenario in case we are not be able to spend budget funds on different investment projects planned for 2009," Shuvalov told Reuters financial television on Tuesday.
"It is too early to draw conclusions about how effective our anti-crisis policy was. We can draw conclusions when Russia returns to sustainable growth. We hope this period will come in the end of 2009 or in 2010," he said.
Despite the economic contraction, Shuvalov said he saw no depreciation risks for the rouble and that the government was more concerned about the risk of the currency appreciating too much, which could hurt the economy further, if the price of its oil exports strengthens further.
"We are afraid of a significant rise in energy prices because it will naturally have an impact on the rouble. The rouble will strengthen which is not very good for Russian industry," Shuvalov said. After devaluing the rouble by a third earlier this year, Russia's central bank has set a wide trading band of between 26 and 41 roubles to a dollar/euro basket, intervening in the market to iron out what it sees as excessive exchange rate volatility.
Shuvalov said the government wants to set strict limits on budget spending in 2010 based on a conservative oil price forecast to avoid a repetition of 2009 when the budget was first based on an overly optimistic forecast of $95 per barrel. "The main thing now is not to make any decisions (regarding fiscal spending plans based on a certain price of oil) ahead of time ... We need to make decisions based on what we have," Shuvalov said.
(Reuters)
MOSCOW: The Russian economy may contract by up to nine percent in 2009 if stimulus funds fail to reach their recipients, First Deputy Prime Minister Igor Shuvalov told Reuters in the gloomiest economic prediction for Russia to date. Economists polled by Reuters see the economy contracting by 4.9 percent in 2009 while the World Bank on Monday said the contraction may reach 7.5 percent.
Government officials earlier said they saw gross domestic product (GDP) falling between six and eight percent. "Maybe eight to nine percent. Maybe. But this is a pessimistic scenario in case we are not be able to spend budget funds on different investment projects planned for 2009," Shuvalov told Reuters financial television on Tuesday.
"It is too early to draw conclusions about how effective our anti-crisis policy was. We can draw conclusions when Russia returns to sustainable growth. We hope this period will come in the end of 2009 or in 2010," he said.
Despite the economic contraction, Shuvalov said he saw no depreciation risks for the rouble and that the government was more concerned about the risk of the currency appreciating too much, which could hurt the economy further, if the price of its oil exports strengthens further.
"We are afraid of a significant rise in energy prices because it will naturally have an impact on the rouble. The rouble will strengthen which is not very good for Russian industry," Shuvalov said. After devaluing the rouble by a third earlier this year, Russia's central bank has set a wide trading band of between 26 and 41 roubles to a dollar/euro basket, intervening in the market to iron out what it sees as excessive exchange rate volatility.
Shuvalov said the government wants to set strict limits on budget spending in 2010 based on a conservative oil price forecast to avoid a repetition of 2009 when the budget was first based on an overly optimistic forecast of $95 per barrel. "The main thing now is not to make any decisions (regarding fiscal spending plans based on a certain price of oil) ahead of time ... We need to make decisions based on what we have," Shuvalov said.
(Reuters)
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