UPDATE4: Putin: Russia’s GDP may fall 0.3% in 2016, but rise 1.4% in 2017

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MOSCOW, Apr 14 (PRIME) -- The Russian government assumes that the country’s gross domestic product (GDP) may contract 0.3% in 2016, but will grow 1.4% in 2017, President Vladimir Putin said Thursday during an annual Direct Line Q&A session.

“I have already said that our GDP fell 3.7% (in 2015). The government assumes that this year a slight contraction will remain, but it will amount to only 0.3%. But next year we expect growth of 1.4%,” he said.

Still, Russia has weathered the current crisis better than in 2008, when the economy fell 10.7%. “Anxiety back then was obviously very serious. Thank God, nothing of the kind is happening now, but we have to have consistent growth resumed,” Putin said.

When asked whether Russia is now “in a black streak or in a white streak”, Putin said that the country is in “a grey streak as the situation has not changed yet, but the trend is positive.”

Russia must ensure consistent economic growth and contain budget deficit at no more than 3% of GDP. “We should continue implementation of a balanced macroeconomic and budget policy, we should ensure budget deficit of no more than 3% and further expand the sphere of economic and political freedom of business. These are the main directions in which we must and we will work,” he said.

“It is on that that we should base successful development of our economy. We need to ensure a return of our country to a trajectory of consistent economic growth. We can do that, and we will do that on the basis of Russia’s anti-crisis plan.”

Economic Development Minister Alexei Ulyukayev said earlier that the economy may fall up to 0.5% in 2016 with an oil price at U.S. $40 per barrel and grow 1.5% in 2017. A representative for the ministry told PRIME that if the oil price amounts to $30 per barrel in the year, the country’s GDP is expected to fall 1.3–1.5%.

Putin said that Russia will cope for some time if it continues to spend its reserves at the rate that it did in 2015. “The reserves have shrank, but by a very insignificant sum and now they amount to, respectively, in dollar equivalent U.S. $50 and $70 billion,” he said.

“This is 10.5% of the country’s GDP … If we stop doing anything at all, everyone stops working, spins wheels, as some say, we may do nothing at all for four months, the country may freeze for four months and still exist.”

Foreign currency reserves are now at the 2014 level of U.S. $387 billion, he said.

The government is working to increase incomes of citizens in the difficult times. “Real discussions are focused on another thing, the most important issue here is to ensure an inflow of investment, to increase efficiency and to ensure demand, I mean to increase incomes of citizens. The government is now thinking about that…about how to help the most vulnerable categories of citizens,” Putin said.

The amount of Russians living below the poverty line has slightly increased. “This is a worrying trend, we see that and we will certainly react to that,” he said, adding that the government will not “print money”, but will change the structure of the economy and is already moving in that direction.

Putin also said he will discuss returning half of income from the growth of fuel excises, or 40 billion rubles, to budgets of regions with the government and the Finance and Transport ministries.

“We will discuss the topic together with them (heads of regions), just like we will do with the Russian government and the Finance and Transport ministries, discuss solution of the question with additional rubles from excises, which…the Finance Ministry wanted to take to the federal budget. I think the money should be transferred to regional road funds,” he said.

(65.7662 rubles – U.S. $1)

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