Putin’s speech on econ­omy short on de­tails

The Star Early Edition - - BUSINESS REPORT / INTERNATIONAL - Darya Kor­sun­skaya and An­drey Ostroukh

RUS­SIA’S lead­ing eco­nomic thinkers say that the coun­try needs bold ac­tion to avoid stag­na­tion.

Af­ter Pres­i­dent Vladimir Putin set out his ideas for the econ­omy in a key­note speech on Fri­day, they are still wait­ing to hear what that ac­tion will be.

Ad­dress­ing the St Peters­burg In­ter­na­tional Eco­nomic Fo­rum, an an­nual gath­er­ing where in­vestors look to the Krem­lin to set the di­rec­tion of travel for the econ­omy, Putin said Rus­sia’s fu­ture lay in de­vel­op­ing the dig­i­tal econ­omy.

But he had few de­tailed and fi­nalised plans on how to achieve that am­bi­tion, and many of the other themes in his speech – on im­prov­ing the in­vest­ment cli­mate, on pro­tec­tion of own­er­ship rights – had re­curred in pre­vi­ous speeches at the fo­rum over sev­eral years.

Putin, now in his 17th year as Rus­sia’s para­mount leader, did not set out what eco­nomic strat­egy he would pur­sue if, as most peo­ple an­tic­i­pate, he is re-elected in 2018 for an­other six-year term.

“The pres­i­dent cre­atively skirted around this sub­ject,” said Alexan­der Shokhin, a for­mer deputy prime min­is­ter and now the head of the Rus­sian Union of In­dus­tri­al­ists and En­trepreneurs, an em­ploy­ers’ lobby group.

Shokhin said Putin still had time to for­mu­late his strat­egy be­fore the elec­tion. In any case, the speech on Fri­day con­tained use­ful sig­nals for Rus­sian busi­nesses, Shokhin said, though they “might not be to­tally un­der­stand­able for for­eign par­tic­i­pants”.

Rus­sia has man­aged to ride out a pe­riod since 2014 when a slump in world oil prices and Western sanc­tions im­posed over Moscow’s in­ter­ven­tion in Ukraine com­bined to tip the econ­omy into a sharp slow­down and send the cur­rency plum­met­ing.

The rou­ble is now sta­ble, in­fla­tion is fall­ing and eco­nomic growth this year is forecast by the World Bank at 1.3 per­cent. For­eign di­rect in­vest­ment was $7 bil­lion (R89.5bn) in the first quar­ter, its high­est level in three years, Putin told the fo­rum.

But pol­icy-mak­ers want to achieve gross do­mes­tic prod­uct of 3 to 4 per­cent, and to achieve that, many econ­o­mists say, Rus­sia must make struc­tural changes to its econ­omy, in par­tic­u­lar by re­duc­ing the role of the state.

“Putin said some stan­dard ba­sic things, voic­ing main themes but of­fer­ing no in­sight­ful ideas,” Dmitry Polevoy, chief economist at ING Bank in Moscow, said of Fri­day’s speech.

The re­turn to growth and pick-up in in­vest­ment are pre­sented by Rus­sian of­fi­cials as a big achievement. “From the maths point of view it is not bad, but con­cep­tu­ally it is far from an ideal sit­u­a­tion that you can brag about,” said Polevoy.

Sev­eral of Rus­sia’s most pow­er­ful busi­ness lead­ers did, how­ever, praise Putin’s speech.

“He is a great leader,” said Vagit Alekperov, chief ex­ec­u­tive of Lukoil, Rus­sia’s sec­ond-big­gest oil com­pany. – Reuters

PHOTO: AP

Rus­sian Pres­i­dent Vladimir Putin an­swers a ques­tion at the St Peters­burg In­ter­na­tional Eco­nomic Fo­rum on Fri­day. Putin says Rus­sia’s fu­ture lies in de­vel­op­ing the dig­i­tal econ­omy.

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