During his two terms as president, Vladimir V. Putin muscled a new kind of capitalism onto the Russian stage, blending government and private business, jailing tycoons and demanding control of the “commanding heights” of the economy, the petroleum companies that now pump more oil than Saudi Arabia.
Russian President Dmitry Medvedev said that Russian economy is more solid than the European one, citing major economic figures.
“Our economy looks more solid and more powerful today than the economy of most of the European countries,” Medvedev said during the meeting with regional media in the city of Ufa, the capital of republic of Bashkiria.
"Russian inflation is under control and even falling and this year will stand at around seven percent, its lowest level," he said during a visit to the southern Urals' Bashkortostan region.
Medvedev said capital flight totalled 64 billion dollars this year but was not the government's "fault" even though analysts say investment is being hampered by corruption, red tape and taxes.
"It's not our fault but it's a calamity that we must absolutely vanquish," he said.
Medvedev said Russia needed to become more aware of its strong points.
"We must push ourselves. I think we need to spend energy and money to make propaganda for the Russian economy, in the positive sense of the word," he said.
Medvedev also said that Russia’s investment climate gradually recovered.
The Russian Central Bank however doubled its 2011 private capital outflow forecast to $70 billion from $36 billion previously. Analysts then said that an unfriendly investment climate amid the political risks ahead of forthcoming elections were the key drivers behind the capital flight.
Russia’s GDP in 2011 is estimated at $2.4 trillion, what is 4.5 percent higher than last year, Medvedev said.
The national debt is about 12 percent of the country's GDP, while most of the developed European countries have from 80 to 100 percent.
Russia has already embarked on reforms, to diversify away from oil dependence and foster a high-technology sector, in all likelihood with Mr. Putin’s blessing.
Over the next decade, oil output in Russia is projected to be flat, at about 10 million barrels per day. Meanwhile, rising demand for consumer goods will outpace Russia’s ability to pay for them, opening a current account deficit by about 2014.
“Russians will continue down the road of privatization and diversification away from oil, not because they like to, but because they will be forced to,” Said Ivan Tchakarov, chief economist for Renaissance, a Moscow investment bank.
Mr. Putin’s critics have pointed out that insiders benefited along with the state, leading to the rise of a new class of ultrawealthy bureaucrats among the security service officials and former St. Petersburg city government functionaries who moved to Moscow with Mr. Putin a decade ago.
Under Mr. Medvedev, in contrast, the government announced a plan to privatize $10 billion in state assets annually for five years to draw in Western capital and expertise during the global financial crisis. Under his watch, the economic pendulum swung back toward reform. The authorities drastically reduced the number of enterprises considered strategic and off limits to foreign investment and came close to negotiating Russia’s entry into the World Trade Organization.
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