News / Europe

Russian Official: Economy May Need Stimulus Measures

Reuters
Russia's economy is at risk of sliding into recession by autumn and the government may need to implement stimulus measures to shore up growth, Economy Minister Andrei Belousov said on Friday.
        
"We are not in recession for now, but we may get there - there is such a risk,'' Belousov told reporters, a day after his ministry slashed its growth forecast. "I think that, if by autumn we don't see growth for some period, we may slide into recession.''
        
A year after Vladimir Putin returned to the Kremlin with calls for a "new economy'' to boost investment and shake up state-run industries, Russia's $2.1 trillion economy is close to stagnating.
        
The Economy Ministry on Thursday cut its growth forecast for this year by a third to 2.4 percent, which would be Russia's worst showing since 2009, when the economy contracted sharply as a result of the global financial crisis.
        
Russia's GDP grew at around one percent in the first quarter, weighed down by lacklustre investment and a decline in exports of strategic commodities such as natural gas that were hit by a slump in the European market.
        
The debt crisis in euro zone member Cyprus, a financial centre through which a quarter of Russian foreign investment and lending flows, has heightened concerns, meanwhile, that the Russian economy will be starved of capital.
        
Stimulus near?
        
Belousov's warning is part of a debate over whether the economy needs monetary stimulus to boost growth nearer to the Kremlin's target rate of 5 percent.
        
Putin's choice to run the central bank, Elvira Nabiullina, has emphasised growth as a key policy goal and dialled back ambitions for reducing inflation that, at over 7 percent, is now running above target.
        
Economists expect the central bank to cut rates at the latest when Nabiullina takes office in June, although with Russia on the brink of stagflation many argue that structural reforms, not rate cuts, are what the economy really needs.
        
Russia instituted a new fiscal rule last year that ties spending to a historical average of prices for oil - Russia's main export - while capping the budget deficit at 1 percent of gross domestic product.
        
That may restrict the government's ability to ramp up state spending, but does not rule out other measures designed to improve Russia's investment climate and boost the flow of credit into the economy.
        
"We will propose economic stimulus measures. We will have a meeting with the president,'' said Belousov. "Measures should be taken, as we need to solve the situation we got into in order not to slide into recession.''
        
Russia's post-crisis recovery has been heavily dependent on the consumer, while a hefty increase in government spending before Putin's election in March 2012 to a third Kremlin term also kept the economy ticking over.
        
The weakening outlook does not necessarily herald a full-blown recession, defined in economics textbooks as two consecutive quarters of negative growth.
        
The government is, meanwhile, considering ramping up sales of state assets to raise funds that could be committed to stimulus spending, including the possible sale of a 19.5 percent stake in state oil major Rosneft.
        
"Although we don't expect Russia to fall into recession-authorities' concerns are understandable and a moderate monetary or fiscal stimulus would be appropriate, in our view,'' said Anatoliy Shal, chief economist at J.P. Morgan in Moscow.
        
"In fiscal policy, using back door to bypass the budget rule would be one way to respond to economic weakness,'' Shal added.

You May Like

Multimedia US Nurse ‘Cured of Ebola,’ NIH Says

Nina Pham, Texas nurse who treated first Ebola patient in US, received no experimental drugs; WHO expects vaccine surge in 2015 More

Video Islamic State Militants Encroach on Baghdad

Iraqi capital not under ‘imminent threat,’ US military says, amid worries about foothold More

Video Hong Kong Protesters Focus on Holding Volatile Mong Kok

Activists say holding Mong Kok is key to their movement's success, despite confrontations with angry residents and police More

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
After Decades of Pressure, Luxembourg Drops Bank Secrecy Rulesi
X
October 21, 2014 12:20 AM
European Union finance ministers have reached a breakthrough agreement that will make it more difficult for tax cheats to hide their money. The new legislation, which had been blocked for years by countries with a reputation as tax havens, was approved last week after Luxembourg and Austria agreed to lift their vetoes. But as Mil Arcega reports, it doesn’t mean tax cheats have run out of places to keep their money hidden.
Video

Video After Decades of Pressure, Luxembourg Drops Bank Secrecy Rules

European Union finance ministers have reached a breakthrough agreement that will make it more difficult for tax cheats to hide their money. The new legislation, which had been blocked for years by countries with a reputation as tax havens, was approved last week after Luxembourg and Austria agreed to lift their vetoes. But as Mil Arcega reports, it doesn’t mean tax cheats have run out of places to keep their money hidden.
Video

Video Kobani Refugees Welcome, Turkey Criticizes, US Airdrop

Residents of Kobani in northern Syria have welcomed the airdrop of weapons, ammunition and medicine to Kurdish militia who are resisting the seizure of their city by Islamic State militants. The Turkish government, however, has criticized the operation. VOA’s Scott Bobb reports from southeastern Turkey, across the border from Kobani.
Video

Video China Political Meeting Seeks to Improve Rule of Law

China’s communist leaders will host a top level political meeting this week, called the Fourth Plenum, and for the first time in the party’s history, rule of law will be a key item on the agenda. Analysts and Chinese media reports say the meetings could see the approval of long-awaited measures aimed at giving courts more independence and include steps to enhance an already aggressive and high-reaching anti-corruption drive. VOA’s Bill Ide has more from Beijing.
Video

Video US ‘Death Cafes’ Put Focus on the Finale

In contemporary America, death usually is a topic to be avoided. But the growing “death café” movement encourages people to discuss their fears and desires about their final moments. VOA’s Jerome Socolovsky reports.
Video

Video Ebola Orphanage Opens in Sierra Leone

Sierra Leone's first Ebola orphanage has opened in the Kailahun district. Hundreds of children orphaned since the beginning of the Ebola outbreak face stigma and rejection with nobody to care for them. Adam Bailes reports for VOA about a new interim care center that's aimed at helping the growing number of children affected by Ebola.
Video

Video Young Nairobi Tech Innovator on 'Track' in Security Business

A 24-year-old technology innovator in Nairobi has invented a tracking device that monitors and secures cars. He has also come up with what he claims is the most robust audio-visual surveillance system yet. As Lenny Ruvaga reports from the Kenyan capital, his innovations are offering alternative security solutions.
Video

Video Latinas Converting to Islam for Identity, Structure

Latinos are one of the fastest growing groups in the Muslim religion. According to the Pew Research Center, about 6 percent of American Muslims are Latino. And a little more than half of new converts are female. VOA’s Carolyn Presutti travelled to Miami, Florida -- where two out of every three residents is Hispanic -- to learn more.
Video

Video Exclusive: American Joins Kurds' Anti-IS Fight

The United States and other Western nations have expressed alarm about their citizens joining Islamic State forces in Syria and Iraq. In a rare counterpoint to the phenomenon, an American has taken up arms with the militants' Syrian Kurdish opponents. Elizabeth Arrott has more in this exclusive profile by VOA Kurdish reporter Zana Omer in Ras al Ayn, Syria.
Video

Video South Korea Confronts Violence Within Military Ranks

Every able-bodied South Korean male between 18 and 35 must serve for 21 to 36 months in the country’s armed forces, depending upon the specific branch. For many, service is a rite of passage to manhood. But there are growing concerns that bullying and violence come along with the tradition. Reporter Jason Strother has more from Seoul.
Video

Video North Carolina Emerges as Key Election Battleground

U.S. congressional midterm elections will be held on November 4th and most political analysts give Republicans an excellent chance to win a majority in the U.S. Senate, which Democrats now control. So what are the issues driving voters in this congressional election year? VOA National Correspondent Jim Malone traveled to North Carolina, one of the most politically competitive states in the country, to find out.
Video

Video Comanche People Maintain Pride in Their Heritage

The Comanche (Indian nation) once were called the “Lords of the Plains,” with an empire that included half the land area of current day Texas, large parts of Oklahoma, New Mexico, Kansas and Colorado.The fierceness and battle prowess of these warriors on horseback delayed the settlement of most of West Texas for four decades. VOA’s Greg Flakus reports from Lawton, Oklahoma, that while their warrior days are over, the 15,000 members of the Comanche Nation remain a proud people.
Video

Video Turkey Campus Attacks Raise Islamic Radicalization Fears

Concerns are growing in Turkey of Islamic radicalization at some universities, after clashes between supporters of the jihadist group Islamic State (IS) or ISIS, and those opposed to the extremists. Pro-jihadist literature is on sale openly on the streets of Istanbul. Critics accuse the government of turning a blind eye to radicalism at home, while Kurds accuse the president of supporting IS - a charge strongly denied. Henry Ridgwell reports from London.

All About America

AppleAndroid