This article is from the source 'nytimes' and was first published or seen on . It last changed over 40 days ago and won't be checked again for changes.
You can find the current article at its original source at http://www.nytimes.com/2014/10/03/world/europe/putin-russia-economy.html
The article has changed 4 times. There is an RSS feed of changes available.
| Version 1 | Version 2 |
|---|---|
| Putin Touts Economic Strength, but Advisers Seem Less Certain | Putin Touts Economic Strength, but Advisers Seem Less Certain |
| (35 minutes later) | |
| MOSCOW — President Vladimir V. Putin did his best to paint a rosy picture of the Russian economy in a speech to business leaders on Thursday, saying the country remains “open to the world” and has a plan for growth in spite of American and European sanctions. | MOSCOW — President Vladimir V. Putin did his best to paint a rosy picture of the Russian economy in a speech to business leaders on Thursday, saying the country remains “open to the world” and has a plan for growth in spite of American and European sanctions. |
| Appearing relaxed and joking with the financiers gathered for a banking conference, Mr. Putin tried to soothe worries that Russia is hemorrhaging money in capital flight, headed into a deep recession with rising inflation and a collapsing ruble and, according to stubborn rumors, preparing to impose capital controls if investors continue to take money out of the country. | Appearing relaxed and joking with the financiers gathered for a banking conference, Mr. Putin tried to soothe worries that Russia is hemorrhaging money in capital flight, headed into a deep recession with rising inflation and a collapsing ruble and, according to stubborn rumors, preparing to impose capital controls if investors continue to take money out of the country. |
| Russia is well prepared to hold out against hard times, he said, because of its still-sizable foreign currency reserves of about $460 billion. To attract investment, he said jokingly as he began a question-and-answer session, “all I have to do is smile and show the devil is not as frightening as he seems.” | Russia is well prepared to hold out against hard times, he said, because of its still-sizable foreign currency reserves of about $460 billion. To attract investment, he said jokingly as he began a question-and-answer session, “all I have to do is smile and show the devil is not as frightening as he seems.” |
| Russia will rely on its reserves to substitute for foreign lending, Mr. Putin said, while stimulating domestic agriculture to put food on the country’s tables in place of Western grocery imports the Kremlin itself banned in tit-for-tat sanctions. | Russia will rely on its reserves to substitute for foreign lending, Mr. Putin said, while stimulating domestic agriculture to put food on the country’s tables in place of Western grocery imports the Kremlin itself banned in tit-for-tat sanctions. |
| Money from one of Russia’s sovereign wealth funds, the Direct Investment Fund, can be channeled into investment for businesses cut off from Western financing by the sanctions, he added. | Money from one of Russia’s sovereign wealth funds, the Direct Investment Fund, can be channeled into investment for businesses cut off from Western financing by the sanctions, he added. |
| He said Russia remained committed to an “open” economy, denied rumors about capital controls and accused the United States and Europe of violating the spirit of the World Trade Organization in imposing sanctions over the Ukraine conflict. Mr. Putin called the sanctions, which single out wealthy individuals and politically connected banks and businesses, “utter foolishness.” | He said Russia remained committed to an “open” economy, denied rumors about capital controls and accused the United States and Europe of violating the spirit of the World Trade Organization in imposing sanctions over the Ukraine conflict. Mr. Putin called the sanctions, which single out wealthy individuals and politically connected banks and businesses, “utter foolishness.” |
| “Yes, we see strong fluctuations on the currency market,” Mr. Putin said. “But I will underscore the most important thing: The fundamental factors supporting stability are very strong, very reliable. This is a nearly deficit-free budget, significant reserves and strong current account balance,” he said. | “Yes, we see strong fluctuations on the currency market,” Mr. Putin said. “But I will underscore the most important thing: The fundamental factors supporting stability are very strong, very reliable. This is a nearly deficit-free budget, significant reserves and strong current account balance,” he said. |
| Mr. Putin’s assurances notwithstanding, most economists say Russia’s macroeconomic underpinnings are shaky. The World Bank projects the economy will grow by only 0.5 percent this year and even less next year. Russia’s former finance minister, Aleksei L. Kudrin, said last month that $110 billion has left Russia in capital flight since the crisis in Ukraine erupted. | Mr. Putin’s assurances notwithstanding, most economists say Russia’s macroeconomic underpinnings are shaky. The World Bank projects the economy will grow by only 0.5 percent this year and even less next year. Russia’s former finance minister, Aleksei L. Kudrin, said last month that $110 billion has left Russia in capital flight since the crisis in Ukraine erupted. |
| The ruble, wobbly in the best of times, dropped to its lowest level against the dollar since the hyperinflation of the early 1990s, before rallying a bit this week. And Russia’s stock market is down about 3 percent this year, in contrast to about 9 percent growth in stock markets globally, according to an index of world equities compiled by Morgan Stanley. | The ruble, wobbly in the best of times, dropped to its lowest level against the dollar since the hyperinflation of the early 1990s, before rallying a bit this week. And Russia’s stock market is down about 3 percent this year, in contrast to about 9 percent growth in stock markets globally, according to an index of world equities compiled by Morgan Stanley. |
| Russia’s economy is deeply dependent on oil and gas revenue, which accounts for about 50 percent of the budget and 60 percent of exports. But oil prices have plunged lately, reaching their lowest level in two years and, according to most analysts, heading even lower, as American production surges. | Russia’s economy is deeply dependent on oil and gas revenue, which accounts for about 50 percent of the budget and 60 percent of exports. But oil prices have plunged lately, reaching their lowest level in two years and, according to most analysts, heading even lower, as American production surges. |
| Even senior Russian economic officials, in presentations just preceding Mr. Putin’s, sounded notes that were jarringly different from their leader’s. | |
| The minister of the economy, Aleksei V. Ulyukayev, described a Russia mired in stagflation, with an inflation rate of 8 percent and growth of less than 1 percent. The chief economist of VTB, a state-owned bank, has estimated that the Western sanctions trimmed about 1 percent of growth from the gross domestic product, or about $20 billion. | The minister of the economy, Aleksei V. Ulyukayev, described a Russia mired in stagflation, with an inflation rate of 8 percent and growth of less than 1 percent. The chief economist of VTB, a state-owned bank, has estimated that the Western sanctions trimmed about 1 percent of growth from the gross domestic product, or about $20 billion. |
| Elvira S. Nabiullina, the head of the central bank, rued that after just completing an investor-friendly overhaul of the system for clearing stock market trades, there were currently few foreign investors to make use of it. | Elvira S. Nabiullina, the head of the central bank, rued that after just completing an investor-friendly overhaul of the system for clearing stock market trades, there were currently few foreign investors to make use of it. |
| “For all this to work like a financial center,” Russia also needs investors, Ms. Nabiullina said. | “For all this to work like a financial center,” Russia also needs investors, Ms. Nabiullina said. |
| Most striking, German O. Gref, a former minister of the economy and the head of Russia’s largest retail bank, Sberbank, delivered a scathing critique of the government’s economic policies, wondering why the country was turning again to a state-led model of economic development. | Most striking, German O. Gref, a former minister of the economy and the head of Russia’s largest retail bank, Sberbank, delivered a scathing critique of the government’s economic policies, wondering why the country was turning again to a state-led model of economic development. |
| The Soviet Union broke apart, he said, because of the “mind-boggling incompetence of the Soviet leadership. They did not respect the laws of economic development.” Half the Russian economy is already in monopolized industries, Mr. Gref said. “You cannot motivate people through the gulag, like in the Soviet Union.” | The Soviet Union broke apart, he said, because of the “mind-boggling incompetence of the Soviet leadership. They did not respect the laws of economic development.” Half the Russian economy is already in monopolized industries, Mr. Gref said. “You cannot motivate people through the gulag, like in the Soviet Union.” |