MOSCOW: President Vladimir Putin assured Russians on Thursday that the economy would rebound after the rouble’s dramatic slide this year but offered no remedy for a deepening financial crisis.
In an assured performance at a three-hour news conference, Putin blamed the economic problems on external factors and said the crisis over Ukraine was caused by the West, which he accused of building a “virtual” Berlin Wall to contain Russia.
Putin even cracked jokes at times, despite pressure to fix an economy that is heading into recession and caught by what his economy minister called a “perfect storm” of low oil prices, Western sanctions over Ukraine and global economic problems.
The rouble has fallen about 45 per cent against the dollar this year, and suffered particularly steep falls on Monday and Tuesday, but Putin said its eventual rise was unavoidable and avoided using the word “crisis”.
“If the situation develops unfavourably, we will have to amend our plans. Beyond doubt, we will have to cut some (spending). But a positive turn and emergence from the current situation are inevitable,” Putin said.
“The growth of the global economy will continue and our economy will rebound from the current situation,” he said, sitting at a large desk before a studio audience, with his comments broadcast live to the nation.
Putin, 62, looked confident in front of screens showing larger-than-life close-ups of his face as he took questions, though at three hours and nine minutes the news conference was shorter than in previous years. On his desk was a white mug with a presidential crest that he occasionally sipped from.
The former KGB spy said Russia must diversify its economy to reduce dependence on oil, its major export and a key source of state income. The recovery could start in 2015, he said, though economic problems might last another two years.
But he stuck to broad promises rather than going into details and announced no major new proposals. He has said many times during 15 years in power that he will reduce Russia’s reliance on energy exports but has failed to do so.
The rouble slipped as he spoke, and was about 1.5 per cent weaker on the day. The central bank increased its key lending rate by 6.5 percentage points to 17 per cent on Tuesday, and has spent more than $80 billion trying to shore up the rouble this year, but to little avail.
Although Putin said the central bank and government had acted “adequately”, he chided the bank for not halting foreign exchange interventions sooner, suggesting more decisive action might have made this week’s big interest rate rise unnecessary.
“All this implies pretty big divisions within the administration as to how to react to the crisis and pressure on the rouble,” Timothy Ash, head of emerging market research at Standard Bank in London, said in a note, adding that heads could roll.
Neil Shearing, chief emerging markets economist at Capital Economics in London, said Putin had signalled no change of government policy.
“Capital controls remain a measure of last resort, and the first line of defence for the rouble will be continued tight monetary policy. Whatever happens, a deep recession now looms,” he said.
