Thursday, April 16, 2015

The worst is over - Putin

Following the economic crisis that wrecked Russian economy owing to the economic sanction imposed on the country by the United States and the EU, the Russia's economy has managed to overcome the worst, as the national currency has become much stronger than most analysts expected, and all the key indicators are improving, President Vladimir Putin said.

“We’ve survived the peak of the problems. Russian banks and corporations have paid off their foreign currency debt,” Russian President Vladimir Putin said during his annual national Q & A session on Thursday.

The Russian economy will have recovered in about two years, he added.

"I think that it may be faster. It will take about two years, I believe,"Putin stressed.

“I think we’ve taken the right measures,” Putin said, referring to the steps taken by the government and the Russian Central Bank to stabilize the economy in December to counter the huge currency devaluation, sanctions, and lower oil prices.

Russia rolled out a multibillion dollar anti-crisis plan in January, that included over 60 measures aimed at reversing Russia’s worsening economic situation, exacerbated by the ruble crisis.

“It could have been faster- true. But steps provided by the plan are well thought out and reflect the state of our economy, and we have 2.3 trillion rubles earmarked for the implementation of this plan,” the Russian president said.

Putin cited oil production as an example of economic strength. Oil production increased 1.1 percent to 525 million tons in 2014, a new post-Soviet record. The Russian Energy Ministry plans to meet or surpass it in the coming year.

Ruble's recovery

After losing about 50 percent of its value in 2014, the Russian ruble has recovered about 30 percent of its value in the first 3 months of 2015. The ruble rally was spurred by the Central Bank lowering interest rates, which brought investors scared by the crisis back to the Russian market.

The President said the growing value of the ruble was not tied exclusively to rising oil prices.

“The ruble has strengthened so much, there must be other [then oil - Ed.] factors,” Putin said.

The massive devaluation made paying off foreign debts more expensive for companies, but also had some positives, like higher revenue from oil, which is sold in dollars.

The Central Bank spent more than $90 billion from the currency reserves defending the ruble in 2014, but has spent significantly less in 2015 since the ruble has stabilized.

“The Central Bank doesn’t control the exchange rate. Unemployment is still 5.8 percent, not as much as Europe where its 11 percent,” Putin said.