Russian economy less reliant on oil, says deputy PM

Russian economy shows signs of recovery during first two quarters as dependence on oil declines, Russian Deputy Prime Minister says

Updated Jul 28, 2015

Russia’s economy has not been overpowered by the decline in oil prices or Western sanctions. Instead insufficient financing for new investments has hurt the economy the most, Russian Deputy Minister Arkady Dvorkovich has said.

Russia’s economy is expected to enter a deep recession this year, due to lower oil prices and Western sanctions. The International Monetary Fund (IMF) has also reduced its growth outlook for Russia as it forecasts a decline of 3.8 percent in 2015 and 1.1 percent in 2016. Standard and Poor’s credit rating agency has also downgraded Russia’s credit rating as they believe oil-prices and Western sanctions over the conflict in Ukraine are pulling the country into a recession.

“Oil prices are not as important to the Russian economy as before,” instead “the shortness of financing for new investments is where the Russian economy is being hit in the most important way,” Dvorkovich stated at the World Economic Forum on East Asia in Jakarta.

To deal with such shortages, Russia is focusing on their own policies such as working with new international partners which they believe will bring new investments into the country, he said.

Although North Korea has different political and economic systems, Moscow is currently building on their relationship with them. “We are long standing partners with North Korea… it requires big investment especially into infrastructure,” said Dvorkovich.

On the other hand, Russia is confident as they see signs of recovery in the first and second quarter.

“We are not counting on high oil prices in our economic policies. We were saving money for the times like what we face now,” said Deputy PM. In addition, he stated that “manufacturing can still go lower, but overall financial markets, our banking system and the economy are stabilizing.”

An indication that Russia’s economy remains robust is evident through recent developments concerning its currency. The ruble is the only currency to hold strong against the dollar and has appreciated against the U.S. dollar by 55 percent since November.

TRTWorld and agencies