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Medvedev forecasts slightly less severe GDP shrinkage

Text by News Wires

Latest update : 2009-10-12

Russian President Dmitry Medvedev says the country's economy will shrink by 7.5% this year, a slight improvement on earlier forecasts.

AFP - Russia's gross domestic product (GDP) will shrink 7.5 percent in 2009, President Dmitry Medvedev said in an interview released Sunday, after earlier government predictions of an eight percent drop.
"This year, we expect to see the GDP decline by about 7.5 percent," Medvedev said in an interview with Russia's Channel One state television, according to a transcript released by the Kremlin.
Last month, Russian Prime Minister Vladimir Putin put the expected decline in GDP at eight percent or slightly less, following earlier official forecasts that it would shrink 8.5 percent.
The Russian economy, which is largely based on the export of oil, gas and other commodities, was badly hit by the global financial crisis after years of enjoying strong growth.
Medvedev said the anticipated 7.5 percent decline was "very serious" and admitted that the government had been surprised at how severely Russia had been hit by the crisis.
"The real damage to our economy was far greater than anything predicted by ourselves, the World Bank and other expert organisations," Medvedev told Channel One.
But the government pulled together and avoided the economic disaster that some had feared by implementing an anti-crisis programme that saved jobs and stabilised Russia's banking sector, he said.
"We were ultimately able to make fairly good use of anti-crisis measures to avoid the worst possible scenarios in terms of unemployment and direct financial consequences from the crisis, as well as effects on the work of the banking system," Medvedev said.
"Our banking system withstood the stress, and now it is doing just fine," he added.
Medvedev also assured television viewers that Russia's currency, the ruble, was "entirely calm and stable" after it initially declined against the dollar in the first months of the crisis amid plunging oil prices.
"It seems to me that overall, our reasonably optimistic expectations are now justified. At the same time, there are grounds to believe that next year we will have a whole new set of problems to address," the president said.
During the first eight months of the year, Russian GDP declined 10.2 percent compared to the same period of 2008, according to the country's economy ministry.
Officials have said however that Russia came out of recession during the third quarter of 2008 and that the economy is gradually recovering.

Date created : 2009-10-11