Putin takes credit for dodging ‘deep crisis’

June19: President Vladimir Putin gave himself credit for avoiding the “deep crisis” that faced Russia last year as tumbling oil prices combined with sanctions over Ukraine to push the economy into decline.

“It hasn’t happened,” Putin said Friday in his annual address to investors at the St. Petersburg International Economic Forum, his premier business event of the year. “We stabilised the situation.”

Putin is facing the biggest challenge of his rule as he juggles the fallout of a pro Russian rebellion in Ukraine with the country’s first recession in six years. The Kremlin said Thursday experts will study a proposal by a close ally to move up presidential elections now slated for March 2018, a move that could extend Putin’s 15-year rule while his approval rating continues to hover above 80%.

Gross domestic product contracted 2.2% in the first quarter from a year earlier, the first drop since 2009 and down from a previous estimate of 1.9%. The economy of the world’s largest energy exporter may shrink for two years in a row for the first time under Putin if oil stays at $60 through 2016, according to the central bank.

Putin lauded the government for maintaining control over inflation, which is decelerating, and for crafting a “sustainable budget.” The economy has shown resilience, with unemployment low at 5.8%, he said.

An extended period of stagnation with zero or negligible growth could last until 2020, according to Evgeny Gontmakher, chief economist at the Institute of Contemporary Development.

But Russian assets remain resilient. The rouble is the world’s best performer globally against the dollar this year with a 12% gain after losing almost half of its value in 2014. The bench mark Mic ex stock index is up 19% this year.