Shuvalov Sees Hard Landing in Russia Surpassing 2009 Crisis

23 Jan 2015 | Author: | No comments yet »

Kudrin Predicts Up to $100 Billion Capital Flight From Russia This Year.

Russian Deputy Prime Minister Igor Shuvalov, speaking at the World Economic Forum in Davos on Friday, warned the West against trying to topple President Vladimir Putin and said Russians are ready to sacrifice their wealth in Putin’s support.DAVOS, Switzerland (AP) — A top Russian official says the country’s economic crisis will worsen and is likely to be longer than the last one in 2008-2009.

Russia has for the past year been sliding into recession amid a slump in its energy export prices as well as Western sanctions against Moscow’s role in the conflict in Ukraine that has claimed more than 5,000 lives. The country must prepare for a hard landing, Shuvalov said at a breakfast organized by the nation’s biggest lender, OAO Sberbank (SBER), on Friday in Davos, Switzerland.

Shuvalov said Russia should focus on cushioning the economic fall through reforms and supporting the financial system. “It is going to get worse and the anti-crisis plan should be aimed at adapting to the hard landing (of the economy).” Shuvalov, who is believed to be one of the richest men in the government, said that what he considers the West’s attempts to oust Putin will only unite the nation further. “When a Russian feels any foreign pressure, he will never give up his leader,” Shuvalov said. “Never. The world’s largest energy exporter is sliding into its first recession since 2009 and may be stripped of its investment-grade rating for the the first time in more than a decade. Capital outflows soared to more than $150 billion last year as sanctions imposed over Russia’s actions in Ukraine and sharp falls in the price of oil eroded confidence in the country’s slowing economy. At the same panel in Davos, Putin’s long-time ally and former finance minister Alexei Kudrin said that Putin clearly thinks that Russia’s foreign policy interests at this point are worth the price the nation pays in higher inflation and the collapse of the Russian ruble.

In fact, in terms of depth and difficulty, it looks to me like we’ve already spent a year on the verge of a longer and more difficult crisis.” Russia’s economy has grown every year since output plunged 7.8 percent in 2009, when oil prices tumbled to less than $40 per barrel amid the global financial crisis and the ruble sank by about a third. To temper the effects of the unfolding crisis, the government needs to allocate funds to cover social benefits if unemployment rises, Russian Prime Minister Dmitry Medvedev told a meeting with ministers Thursday in Moscow, ordering the cabinet to accelerate work on an anti-crisis plan.

Russia’s foreign currency reserves shrank by 2 percent last week alone to $379 billion as the Central Bank sold foreign currency in a bid to prop up the ruble.

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