The Great One
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Russia faces full-blown crisis, says Kudrin
Jack Farchy©AP
Alexei Kudrin has told the Kremlim it needs to restore relations with the US and Europe
Russia faces a “full-blown economic crisis” next year that will trigger a series of defaults and the loss of its investment-grade credit rating, a respected former finance minister has warned.
Real incomes will fall by 2-5 per cent next year, the first decrease in real terms since 2000, said Alexei Kudrin, a longtime ally of President Vladimir Putin and widely tipped to succeed Dmitry Medvedev as prime minister.
His warning came as Russia’s central bank was forced to prop up a midsized lender in a sign of the strains on the banking system.
“Today I can say that we have entered or are currently entering a full-blown economic crisis; next year we will feel it in full force,” Mr Kudrin said in Moscow on Monday.
In unusually blunt comments for an establishment figure, he also called on Mr Putin to do what was necessary to improve relations with the west: “As for what the president and government must do now: the most important factor is the normalisation of Russia’s relations with its business partners, above all in Europe, the US and other countries.”
Mr Kudrin’s insistence on normalisation of relations with western capitals as a condition for tackling the crisis is at odds with the defiant tone struck by Mr Putin at his annual press conference last week.
Mr Kudrin estimated that western sanctions were responsible for up to 40 per cent of the rouble’s depreciation, greater than Mr Putin’s own estimation of 25-30 per cent.
The former finance minister’s bleak forecasts for the Russian economy come after a week of high drama in which the rouble fell by as much as 36 per cent in one day, rattling popular confidence in the government.
On Monday, the rouble rose 5.1 per cent to 56.5 to the dollar following a series of measures announced in the second half of last week to shore up confidence in the banking system.
The central bank said it would inject Rb30bn ($530m) into Trust bank, the country’s 28th-largest lender by assets, “to prevent bankruptcy”.
The wild gyrations in the rouble and on Russia’s equity and bond markets last week have taken their toll on banking sector liquidity, with interbank interest rates rising to the highest level in nine years. The central bank and government have announced a series of measures to support the banking sector, including a 1tn rouble ($18bn) recapitalisation plan announced on Friday.
The central bank said the state deposit insurance agency would take over administration of Trust bank while a buyer was sought. “It is assumed that the investor will be one of the large Russian banks,” the central bank said in a statement.
Mr Medvedev told the heads of Russia’s big banks on Monday to make sure that during the new year holidays people had “an opportunity to relax without worrying about what is going on in the banking sector”.
In another sign of pressure, the government said it would impose duties on exports of grain, which have boomed because of currency weakness, forcing prices up for domestic consumers.
Mr Kudrin said the economy would contract by at least 4 per cent next year if oil prices remained at $60 a barrel, echoing central bank forecasts of a 4.5-4.7 per cent contraction. There would “certainly” be a recession in 2016.
“Russia will have its rating downgraded, it will be cut to junk,
” he said. “Due to the economic disruption . . . payment discipline will fall significantly and we will see a series of defaults of medium-sized and large companies.”
Mr Kudrin also predicted an increase in dissatisfaction among the population that could have a political impact. “There will be a fall in living standards, it will be painful. Protest activity will increase,” he said.
He declined to comment on his own potential return to the government.
http://www.ft.com/intl/cms/s/0/d8bf5266-89cb-11e4-9dbf-00144feabdc0.html#axzz3MinRiVTK
Putin said Russia would recover in 2 years
This guy says the exact opposite
Jack Farchy©AP
Alexei Kudrin has told the Kremlim it needs to restore relations with the US and Europe
Russia faces a “full-blown economic crisis” next year that will trigger a series of defaults and the loss of its investment-grade credit rating, a respected former finance minister has warned.
Real incomes will fall by 2-5 per cent next year, the first decrease in real terms since 2000, said Alexei Kudrin, a longtime ally of President Vladimir Putin and widely tipped to succeed Dmitry Medvedev as prime minister.
His warning came as Russia’s central bank was forced to prop up a midsized lender in a sign of the strains on the banking system.
“Today I can say that we have entered or are currently entering a full-blown economic crisis; next year we will feel it in full force,” Mr Kudrin said in Moscow on Monday.
In unusually blunt comments for an establishment figure, he also called on Mr Putin to do what was necessary to improve relations with the west: “As for what the president and government must do now: the most important factor is the normalisation of Russia’s relations with its business partners, above all in Europe, the US and other countries.”
Mr Kudrin’s insistence on normalisation of relations with western capitals as a condition for tackling the crisis is at odds with the defiant tone struck by Mr Putin at his annual press conference last week.
Mr Kudrin estimated that western sanctions were responsible for up to 40 per cent of the rouble’s depreciation, greater than Mr Putin’s own estimation of 25-30 per cent.
The former finance minister’s bleak forecasts for the Russian economy come after a week of high drama in which the rouble fell by as much as 36 per cent in one day, rattling popular confidence in the government.
On Monday, the rouble rose 5.1 per cent to 56.5 to the dollar following a series of measures announced in the second half of last week to shore up confidence in the banking system.
The central bank said it would inject Rb30bn ($530m) into Trust bank, the country’s 28th-largest lender by assets, “to prevent bankruptcy”.
The wild gyrations in the rouble and on Russia’s equity and bond markets last week have taken their toll on banking sector liquidity, with interbank interest rates rising to the highest level in nine years. The central bank and government have announced a series of measures to support the banking sector, including a 1tn rouble ($18bn) recapitalisation plan announced on Friday.
The central bank said the state deposit insurance agency would take over administration of Trust bank while a buyer was sought. “It is assumed that the investor will be one of the large Russian banks,” the central bank said in a statement.
Mr Medvedev told the heads of Russia’s big banks on Monday to make sure that during the new year holidays people had “an opportunity to relax without worrying about what is going on in the banking sector”.
In another sign of pressure, the government said it would impose duties on exports of grain, which have boomed because of currency weakness, forcing prices up for domestic consumers.
Mr Kudrin said the economy would contract by at least 4 per cent next year if oil prices remained at $60 a barrel, echoing central bank forecasts of a 4.5-4.7 per cent contraction. There would “certainly” be a recession in 2016.
“Russia will have its rating downgraded, it will be cut to junk,
” he said. “Due to the economic disruption . . . payment discipline will fall significantly and we will see a series of defaults of medium-sized and large companies.”Mr Kudrin also predicted an increase in dissatisfaction among the population that could have a political impact. “There will be a fall in living standards, it will be painful. Protest activity will increase,” he said.
He declined to comment on his own potential return to the government.
http://www.ft.com/intl/cms/s/0/d8bf5266-89cb-11e4-9dbf-00144feabdc0.html#axzz3MinRiVTK
Putin said Russia would recover in 2 years
This guy says the exact opposite
