Global crisis affecting Russia, says Putin

By IANS/RIA Novosti,

Moscow : Russian President Vladimir Putin has warned that the deepening global economic crisis was damaging the Russian economy, and ordered the government to find ways to prevent a recession.

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“The global crisis is taking an even more dangerous shape, which inevitably affects us as well,” Putin said at a meeting with Prime Minister Dmitry Medvedev.

“This is how it was in 2008, and now we are witnessing the same thing. However, unlike our friends and partners in Europe and other parts of the world, the Russian economy is showing vitality and prospects of further growth,” Putin said.

Putin and Medvedev agreed Monday to set up a joint meeting of the Kremlin and government officials and advisers to come up with new mechanisms for tackling the risk of a recession.

Russia’s economy shrank almost 10 percent following the global economic crisis that began in 2008. It was saved from total collapse by heavy infusions of capital in the banking sector and industries that were hurt the most.

Recovery has been slow, at about four percent GDP growth annually, or half of the pre-crisis pace.

Russia’s GDP grew by only 3.4 percent last year, largely due to weak demand for Russian exports in Europe and faltering investment.

The negative trend worsened in the beginning of 2013, as Russia’s GDP grew by a mere 0.9 percent in January, while in February growth rates dropped to 0.1 percent.

Russia’s economics ministry had to lower its 2013 forecast for the country’s GDP growth to 2.4 percent from 3.6 percent.

The ministry also expects net capital outflow to reach $30-35 billion in 2013 compared with its original forecast of 0-$10 billion.