Russia’s Finance Minister Warns Of Zero GDP Growth This Year
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The Russian economy may not see any growth in 2014, admitted Finance Minister Anton Siluanov, as capital flight accelerates in the wake of the Ukrainian standoff.
Speaking at a government meeting, as cited by Russian news agencies, the Finance Minister claimed that nearly $63 billion had left Russia in the first three months of 2014, while more capital outflow is expected if tensions continue to rise between Moscow and the West.
“Continuing capital flight lowers the opportunities for economic investment and creates risk of an unbalanced budget,” said Siluanov.
The Russian economy may not see any growth in 2014, admitted Finance Minister Anton Siluanov, as capital flight accelerates in the wake of the Ukrainian standoff.
Speaking at a government meeting, as cited by Russian news agencies, the Finance Minister claimed that nearly $63 billion had left Russia in the first three months of 2014, while more capital outflow is expected if tensions continue to rise between Moscow and the West.
“Continuing capital flight lowers the opportunities for economic investment and creates risk of an unbalanced budget,” said Siluanov.
[quote]“The main reason for capital flight is instability in the way the geopolitical situation develops,” he noted.[/quote]Siluanov said that while government forecasts for economic growth remains at 0.5 percent this year, the eventual figure “may be around zero.”
[quote]”The current conditions are the most difficult since the 2008-2009 crisis,” he said.[/quote]Over the past three years, Russia has seen economic growth fall from 4.3 percent in 2011 to 1.3 percent in 2013.
Siluanov said that he saw further risk for an economic downturn linked to a fall in oil prices, adding that the price of $113/barrel barely balances the state budget.
Related: Why Russia Fears ‘Losing’ Ukraine
Related: Why Russia Really Wants Crimea
On Tuesday, Russian Prime Minister Dmitry Medvedev criticised “external forces” for trying to push the country toward an “artificial crisis.”
However, Medvedev said that Russia would still dip into its sovereign wealth funds and reserves to help rebuild Crimea, including putting extra money into the peninsula’s infrastructure, as well as increasing residents’ salaries and pensions.
Funding for the region, home to Russia’s Black Sea Fleet, will reach at least 130 billion rubles ($3.6 billion) next year, according to Bloomberg sources.
