Min: Russia needs 5 tln rbl more investment to boost econ growth

MOSCOW/ANOSINO, Moscow Region, Sep 25 (PRIME) -- The Russian economy has to find 5 trillion rubles of additional investment per year to speed up economic growth to above the world’s average, Economic Development Minister Maxim Oreshkin said on Monday in a conference.

“The investment activity contracted significantly at the end of 2014 and in 2015, but has returned to positive dynamics since the middle of last year. We see recovery here. It is very important for us to move further so that investment growth becomes stronger and the amount of projects implemented in the Russian economy rises,” he said.

“Our estimates show that we need to add about 5 trillion rubles of investment each year so that the growth dynamics of the Russian economy rises above the average world figures for 2016.”

He added that the ministry expects the GDP to grow slightly above 2% in 2017.

Russia’s payment balance is stable despite a rapid plunge of oil prices over the past years. “Capital is flowing actively to the Russian market, we saw several periods of an active inflow of capital to the state sector and the OFZ federal bond market this year. This shows us that foreign investors believe in the Russian economy,” he said.

He added that no one should expect any serious worsening of the economy in coming years.

Russia creates its macroeconomic policy to prepare for external shocks, including an inflation targeting policy of the central bank, the floating exchange rate of the ruble, and the budget aimed at readiness to contraction of oil prices to U.S. $40 per barrel and below, he said.

He also said that an increase of Russia’s rating by international rating agencies is inevitable. “The story here is that financial markets have long been evaluating Russia’s credit rating higher than what the rating agencies say. Last Friday Fitch improved the outlook on Russia’s rating, and they already have the rating in the investment grade,” he said.

“Other agencies paused for a moment, but it is a purely psychological pause. They were very aggressive and negative toward Russia especially in the first half of 2015 and their forecasts were even catastrophic, if we look at some agencies. So it is difficult for them to acknowledge that they were mistaken and the situation has turned out to be significantly better,” he said.

“Taking into account our achievements in the macroeconomic policy and the recovery of economic growth, the increase of ratings is simply inevitable and they are waiting for a moment when they are able to do it with as low damage to their reputation as possible.”

(57.6527 rubles – U.S. $1)

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