January 30, 2009

Moscow 2009 economic forecast is downbeat

Economic growth in Russia will be near zero in 2009 and government revenues could decline by 40 percent, officials in Moscow said Friday.

Finance Minister Alexei Kudrin told lawmakers in Moscow the global financial crisis will cause revenues to decline this year by 4.4 trillion rubles ($133 billion) -- more than 5.4 percent of Russia's gross domestic product -- RIA Novosti reported.

Our economic growth will most likely be close to zero, Kudrin told the State Duma.

He said Russia would have to increase borrowing and use reserve funds to close a budget deficit this year. The Reserve Fund and the National Wealth Fund contain 7.3 trillion rubles ($215 billion), Kudrin said.

The Finance Ministry reported to parliament that GDP grew by 6 percent in 2008, down from 8.1 percent growth in 2007.

First Deputy Prime Minister Igor Shuvalov said the global crisis is likely to last for three years but 2009 shapes up as the hardest year.

On the whole the situation will be rather difficult throughout 2009, Shuvalov said.

The government has announced plans to give 60,000 rubles ($1,700) to jobless Russians to use as capital for starting up small business, the Moscow Times reported.

Deputy Health and Social Development Minister Maxim Topilin said Thursday the state will offer subsidies to companies that retrain employees who face losing their jobs through layoffs, and some workers will be paid to relocate to areas where there are jobs.