Russian economy to start recovering only in 2011

The Russian economy will begin to recover in 2011, Arkady Dvorkovich, an assistant to the Russian president said at a forum of the Russian Union of Industrialists and Entrepreneurs.

Photo: Russian economy to start recovering only in 2011

The year 2011 will become the year of the economic rise in the country. However, it may take Russia a longer time if the government does not conduct adequate reforms of the bank system.

“If Russian banks do not give loans to businesses on reasonable conditions, the crisis in the country will last longer,” the official said.

He pointed out several problems, which Russia has in the crediting field. One of them is connected with the weak and underdeveloped mechanism of crediting.

There are no tools to supervise the targeted use of the funds. “The problems need to be solved in a complex. Everything should be solved in several months,” the official said.

The financial burden on the Russian business is not supposed to increase from 2011 for it will reduce the competitive ability of the Russian economy, Dvorkovich said.

“I think that a reduction of the value added tax will take place in 2011, but it is my personal opinion only,” the official said. The Finance Ministry will have the decisive word on the matter.

As Pravda.Ru previously reported Russia's economy will contract by more than 2 percent this year under the weight of the financial crisis and lower commodity prices.

"The GDP forecast has been downgraded to minus 2.2 percent," Andrei Klepach was quoted saying by the agency.

Klepach's estimate was the first official announcement of a sharp fall in the Russian economic growth, with the government previously predicting only a 0.2 percent contraction for 2009.

The minister said the forecast had been revised due to increasing investment outflows, which he estimated at 14 percent this year.

Russia 's stock markets reacted with steep drops in late trading. Both the RTS, Russia's benchmark index, and the larger MICEX exchange shed 9.4 percent by the close of the day. The national currency fell 2 percent against a dollar-euro basket.

But even after the latest forecast revisions, the government is still more optimistic than most analysts about the year ahead.