PRESIDENT Vladimir Putin has insisted Russia will weather its worst economic storm since the financial crash of 1998, which has seen the value of the rouble plummet by 45 per cent and Russians scramble to buy dollars and imported goods.
Trying to ease mounting fears over the ailing health of the Russian economy, Mr Putin stressed there was no crisis and that the economy would bounce back.
“I don’t believe you can call it a crisis – you can call it what you like,” he said during a three-hour, end-of-year press conference.
“The growth of the global economy will continue and our economy will rebound from the current situation,” he added. “Under the most unfavourable external economic scenario, this situation may go on for about two years. But it may also start improving in the first quarter, in the middle, at the end of the next year.”
The president said “external factors” such as oil and gas prices were to blame for his country’s plight.
Russia’s economy has been torpedoed by a dramatic fall in oil prices from $98 a barrel two months ago to below $60 this week. Crashing oil prices have cut at the heart of Russia. The country derives some 68 per cent of all export income from fossil fuels and they provide the government with 50 per cent of its revenue.
On Tuesday alone, the rouble fell by 15 per cent against the dollar, and the central bank reacted by hiking interest rates up by 6.5 points to 17 per cent.
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For many Russians, the economic storm has awoken unpleasant memories of the 1998 crash when the rouble fell through the floor, banks crashed, shop shelves emptied and people saw their savings reduced to nothing.
Once again Russians are rushing to buy dollars, and are snapping up imported consumer goods such as mobile phones and televisions in the fear they will soon become too expensive.
Electrical consumer goods producer Apple announced it had suspended online sales in Russia because the tumbling rouble had made it difficult for sellers to fix a price.
Mr Putin said the government had taken “adequate measures” to right the economy: a tepid praising of officials that some experts have interpreted as presidential disapproval of the handling of the economy and a precursor to some sackings.
The president also claimed western sanctions imposed on Russia because of its Ukraine policies had contributed 25 to 30 per cent of the rouble’s woes.
Rounding on a West that has accused him of stoking a new cold war, Mr Putin accused his rivals of trying to use sanctions to sap Russia’s strength and tame the bear, one of Russia’s national symbols.
“If [the West] takes out the bear’s fangs and claws, it will not be able to do anything. It’s just a stuffed animal. We are trying to maintain our security interests,” he said.
Offering clues on how Russia’s leaders intend to pull the economy out of its current mire, the former KGB agent said it was imperative the country diversified its economy in order to wean itself off fossil fuels.
“We need to provide a friendly business environment for entrepreneurs, we need more innovation, to diversify the economy, regional development, to stop using police/courts for business disputes,” Mr Putin said.
“Our problem is that everyone wants to invest into energy as that is the most profitable. No-one is investing into hi-tech.”
By stressing the need to diversify, the president is repeating previous pledges made by himself and other Russian leaders to dilute the influence of oil on the economy, which appear to have made little impact.
In 2007, Mr Putin said “diversification of Russian industry is becoming one of our main and common economic priorities”.
And the following year, Dmitry Medvedev, then the president and now prime minister, announced a “Go Russia” campaign aimed at ending the country’s “humiliating dependence on oil and raw materials”.
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