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Structural imbalance main reason for Russian economic slowdown: FinMin

Xinhua, April 15, 2015 Adjust font size:

Russia's current economic slowdown is caused by structural imbalance, Finance Minister Anton Siluanov said Tuesday.

"The main reason for Russia's sluggish economic growth is the internal structural imbalance, not the (Western) sanctions," Siluanov was quoted by RIA Novosti news agency at a ministry meeting.

He said that economy slowdown in Russia started as early as in 2013, before the West introduced sanctions on Moscow.

Noting that the Russian economy still relies on raw materials export, Siluanov called on the government to get prepared for long- term low prices of oil and other natural resources.

The ministry forecasts oil prices to recover to 70 U.S. dollars per barrel by 2017 compared to the current level of slightly above 50 dollars.

Nevertheless, Siluanov did not rule out the possibility that economic growth could resume in the second quarter of 2015, as the economy has mostly adapted itself to the new conditions with financial market and ruble stabilizing.

Citing the reduction in inflation and banks' interest rates, the minister claimed that anti-crisis measures have brought fruits.

Meanwhile, Siluanov reiterated that inflation rate in 2015 would be under 11 percent, much lower than the official outlook of 16.9 percent.

The minister said that total capital outflow from Russia in 2015 would reach 90 billion U.S. dollars, noting there was a sharp monthly slowdown.

It is possible for the ministry to restrict spending from the Reserve Fund in 2016 and cut certain defense-related projects in Russia's 2016-2018 draft budget, he added.

Russian Prime Minister Dmitry Medvedev, who also attended the meeting, urged the optimization of the expenditure on defense and security.

The federal budget expenditure must be reduced by 1.5 trillion rubles (over 28 billion dollars) in 2016 and by 2 trillion rubles (over 38 billion dollars) in 2017, according to Siluanov. Endite