Russian president Vladimir Putin conducted his eleventh major news conference today at Moscow's World Trade Center.
Russian president Vladimir Putin conducted his eleventh major news conference today at Moscow's World Trade Center.
He answered 44 questions. The first one was from Alexander Gamov (the Komsomolskaya Pravda).
«Here is my question. Before coming here, I reread the transcript of your last year’s press conference, and there we also discussed the difficult situation developing in the Russian economy. When Vyacheslav Terekhov and our other colleagues asked you then how long it would take to get over this complicated situation, you said in the worst case scenario this would take a year or two. These were your words. I am sure you remember them. This means this would be roughly late 2016 – early 2017. Could you please tell us if your feelings regarding our economic recovery have changed? The country is going through very hard times, and you know this better than we do. What is your forecast for the future?», - Gamov asked.
Here is Putin’s answer:
To begin with, I will tell you a very old joke.
Two friends meet and one asks the other: ”How are you?“ The other says: ”My life is all stripes – black stripes followed by white ones.“ – ”So which one is it now?“ – ”Now I’m in the black one.“ Another six months pass, they meet again: ”How’s life? I know it’s all stripes, but which one is it now?“ – ”It’s black now.“ – ”But it was black last time!“ – ”Looks like it was white last time.“
We are having something very similar.
When a year ago we spoke of our plans and how we would move ahead to recover from the crisis, about our prospects, we, knowing that unfortunately our economy is very dependent on foreign economic factors, mainly the prices for our traditional exports like oil and gas, petroleum products and chemicals, which are all calculated based on oil and gas prices, proceeded from the idea that the average price of Brent, our crude oil, would be around $100 a barrel.
This was in early 2014. We used this figure in all our further calculations of macroeconomic parameters, revenue and spending, and social support and support for the economy, and late last year the Economic Development Ministry built its development plans proceeding from these figures. However, by the end of this year we had to rerun all our calculations, and even last year we had to do this as oil prices fell almost by half, not by some percentage, but by half from $100 a barrel to $50.
We calculated the budget for next year based on this very figure, a very optimistic one of $50 a barrel. However, now it is what — $38? Therefore, I believe we will have to make further adjustments.
At the same time, I would like to use your question to demonstrate where we stand.
Statistics show that the Russian economy has generally overcome the crisis, or at least the peak of the crisis, not the crisis itself.
Naturally, after the drop in energy resource prices all our other figures started ‘sliding’. What are they? The GDP has gone down by 3.7 percent. As of December 7, the inflation has reached 12.3 percent since the beginning of the year.
I find it important to say this, because there are sure to be other questions dealing with our development prospects and our current state of affairs. To understand these things we need to know these figures and proceed from them.
The real disposable household income has gone down; fixed investment has dropped by 5.7 percent over the first 10 months of the year. At the same time, as we have already said, statistics show that the Russian economy has generally overcome the crisis, or at least the peak of the crisis, not the crisis itself.
Starting with the 2nd quarter of this year, we have been observing signs of economic stabilisation. What leads us to such a conclusion? In September-October the GDP grew (it is growing already) by about 0.3–0.1 percent compared to the previous month. The volumes of industrial production stopped falling as of May. In September-October, we also had a small growth in industrial production – 0.2–0.1 percent. Incidentally, industrial production in the Far East grew by 3.1 percent.
Agriculture is demonstrating positive dynamics with an at least 3 percent growth. This means we are doing all the right and timely things to support agriculture. For the second year running our grain crops exceeded 100 million tonnes – 103.4. This is very good. I would like to use this opportunity to once again thank our agricultural workers for their effort.
The labour market is stable, with the unemployment rate hovering around 5.6 percent. We can see that if we look back at 2008, this is an overall positive result of the Government’s efforts.
Our trade balance also remains positive. The overall trade volumes have gone down, but the export surplus remains at a rather high level of about $126.3 billion. Our international reserves stand at $364.4 billion – this is a slight reduction, but a good figure nevertheless.
The Russian Federation’s external debt has gone down by 13 percent compared to 2014. Capital outflow has also significantly dropped. Moreover, in the 3rd quarter we observed a net inflow.
The reduction in our debt burden is a very important positive indicator. This is the other side dealing with the so-called sanctions. It would have been good, of course, to have access to foreign refinancing markets, so that all the money would stay in the country and help us develop, but on the other hand over-crediting is also a bad sign.
So, what did we do? Despite all limitations, we complied with all our commitments to our partners, including international credit institutions. We pay everything due on time and in full. As a result, the overall joint debt, which is not the state debt, but the total debt of our financial institutions and companies operating in the real sector of the economy – the overall joint debt has gone down, which is generally a very positive thing.
As I have already said, we are observing a net capital inflow, which is also a very positive factor, and I am sure experts are saying this as well. This means that investors, seeing the realities of our economy, are beginning to show some interest in working here. Despite the complicated situation, the fuel and energy complex continues developing. The production of oil, coal and electricity has grown. More than 4.6 gigawatt of new generating capacity will be commissioned by the end of the year.
We have already commissioned about 20 facilities; this is somewhat less than last year and the year before that. In the previous two years, we had an absolute record, but 4.6 gigawatt is also very good. We will retain this rate in the following years. This is also very important as it shows the growing capacity of the economy as a whole, its energy security.
The infrastructure is also developing actively. Russia’s entire seaport infrastructure has grown by 19.5 million tonnes worth of capacity. I would like to use this opportunity to draw your attention to the fact that over the January-September period the volume of cargo loaded at Russian ports went up by 3 percent. What does this mean, colleagues? Why have our budget revenues from our export goods gone down? Because of the prices. Meanwhile, as we are observing growing trade turnover at the ports, it means the physical volume has not gone down but has actually increased. This is a very positive factor.
We continue developing our airport system. In the first nine months, our airports served over 126 million passengers, which is 2.5 percent more than last year. Internal air traffic has also grown noticeably – by more than 16 percent.
Despite the complicated financial and economic situation, we continue our responsible state financial policy. In the 11 months of this year federal budget revenue reached 12.2 trillion, spending – 13.1 trillion. The budget deficit, as we can see, stands at 957 billion. The expected budget deficit by the end of the year is about 2.8 – 2.9 percent of the GDP. This is a satisfactory figure for the current economic situation, even more than satisfactory.
To achieve a balanced federal budget this year we used our reserve fund. At the same time, it is very important that the sovereign funds generally remain at a healthy level of 11.8 percent of the GDP. The reserve fund amounted to 3.931 trillion rubles, which is 5.3 percent of the GDP, while the national welfare fund was 4.777 trillion rubles, which is 6.5 percent of the GDP.
We have complied with all our social commitments this year and are witnessing a natural population growth. This is a very good figure that speaks of the people’s state of mind, shows that they have the opportunity to plan their families, which makes me very happy. Thus, 6.5 million Russian families have received maternity capital over the entire period since the programme was introduced. We have now extended this programme. I would like to remind you that in 2016 maternity capital payment will remain the same as in 2015 at 453,000 rubles.
In the majority of regions, the situation with accessibility of preschool facilities has been resolved by over 97 percent.
According to the Federal State Statistics Service, life expectancy at the end of this year is forecast to exceed 71 years.
We have complied with our commitments in terms of adjusting pensions to the actual inflation in 2014, with the PAYG component increased by 11.4 percent. As of April 1 of this year, social security pensions have gone up by 10.3 percent.
You began your question by asking about last year and our expectations for next year and the year after that. Proceeding from the current value of our exports, the Government is expecting our economy to achieve at least a 0.7 percent growth in 2016, 1.9 percent in 2017 and 2.4 percent in 2018.
I would like to draw your attention to the fact that all our calculations were based on the oil price of $50 a barrel. Now the price is lower. Volatility is high. We will not rush to adjust the budget, as this would lead to a reduction in the funding of both the social and real sectors; however, the Government is of course working on different development scenarios. The Government should have this instrument available, to be ready for any developments.
Our calculations were based on the oil price of $50 a barrel. Now the price is lower. We will not rush to adjust the budget, as this would lead to a reduction in the funding of both the social and real sectors; however, the Government is working on different development scenarios.
Of course, potential GDP growth is not limited to our export-related opportunities. We must also promote import replacement, as I said in my Address to the Federal Assembly, which is not a cure-all, but we believe that it will help us retool a large park of the production sector and the agriculture industry. This programme will enable us to introduce novel technology and, hence, to increase labour productivity. We must certainly continue working to improve economic management, to de-bureaucratise our economy, and to create more attractive conditions for doing business and for helping entrepreneurs achieve the goals that are facing them and the national economy as a whole. We will be working hard, with a focus on these targets.
Thank you for your question: it allowed me to use the materials at hand.
