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October 6, 2011. Minister Elvira Nabiullina Speaks at a Plenary Meeting of VTB Capital «RUSSIA CALLS!» third Annual Investment Forum

06.10.11

Nabiullina: “Russian Economy to Preserve Growth Options in the Second Crisis Wave”

 MOSCOW, October 6 – NOVOSTI Russian Information Agency – In the second crisis wave, Russia will be able to maintain the budget deficit at 4.5% of GDP and secure some economic growth, told Elvira Nabiullina, Minister for Economic Development of the Russian Federation, at the Russia Calls! Forum on Thursday.

 According to her words, the deficit is expected to range from 0.7% to 1.5% of GDP, according to the draft budget, in the near future. However, the Ministry understands how these parameters may change in the next crisis wave.

 Nabiullina said they carried out stress testing that suggested that, even in the second crisis wave, which, in her opinion, should not be as severe as the first one of 2008/2009, if oil prices drop down to US$80/bbl, GDP growth will slow down to on average of 2% during the year, and if prices fall to US$60/bbl, GDP may shrink by 1.5%-2%.

 "But even if the unfavorable global trends persist, by making recourse to internal sources of economic growth – and they are available in this country - the economy will resume its growth in 2012/2014 by 2.5%-3.7% of GDP in such a distressed environment”, the Minister said.

 “Unlike other developing nations, even if oil prices drop down to 60 US$/bbl in annual terms, Russia would have maneuver to resume its incentive fiscal programs, and the (budget – Editor) deficit would stand at 4.5%”, Nabiullina believes.

 Nabiullina: “Inflation will drop from 7.2% in September to 7% in December in Annual Terms”

 MOSCOW, October 6. – INTERFAX. – Inflation in Russia is expected to drop from 7.2% in September to 7% in December in annual terms, told Elvira Nabiullina, Minister for Economic Development and Trade of the Russian federation, at VTB Capital forum in Moscow.

 This is the best result in the contemporary Russian history, she added.

 Annual inflation came to 9.6% in last May; however, the August deflation and the zero price growth in September pulled down this indicator. Besides, annual inflation would decrease due to the base effect: the price hike last autumn was due to the consequences of draught and crop failure, Elvira Nabiullina Reminded.

 Nabiullina: At US$80/bbl, Russia’s GDP would rise by 2%-2.5%, and at US$60/bbl, drop by 1.5%-2%

 MOSCOW, October 6. – INTERFAX. – Russia’s GDP growth rate would slow down to 2%-2.5%, if annual average oil prices drop to US$ 80/bbl. Such estimate was made by the Ministry for Economic Development and Trade, noted Elvira Nabiullina, the Head of the Ministry, at VTB Capital forum in Moscow..

 The Ministry also estimated Russia’s economic prospects if the prices drop to US$60/bbl. “This is a true stress test”, Elvira Nabiullina noted. In this scenario, the Ministry for Economic Development and Trade expects GDP to fall by 1.5%-2%.

 In 2011, the Ministry forecasts a 4.1% GDP growth, she reminded.

 Nabiullina: “Privatization Timing May be Adjusted if Investment Advisors Recommend So”

 MOSCOW, October 6. – INTERFAX – The timing for corporate privatizations in Russia may be adjusted, but only if the investment advisors engaged for this purpose recommend so, told Elvira Nabiullina, Minister for Economic Development of the Russian Federation, speaking at VTB Capital RUSSIA CALLS! Conference in Moscow on Thursday.

 "Of course, the sales timing may be adjusted, considering the environment on global financial markets, but only if the professional advisors provide the appropriate recommendations”, she said.

 Elvira Nabiullina reminded that the Government plans to earn some US$ 40 billion in three years from privatization.

 "But we do that not only and not just for fiscal purposes, but rather to reduce the governmental share in the economy, to enhance transparency, to improve corporate governance, to develop capital markets”, the Minister said.

 According to her, to make sales as transparent as possible, the top Russian and global investment banks were invited as advisors. Therefore, the Minister says, the government will be guided by these advisors’ recommendations in making its decision as to the timing of privatization of any particular companies.

 Head of MED: Labor productivity will grow by at least 13% a year in the next 3 years

MOSCOW, October 6. – RBC. – In the next 3 years, labor productivity will grow by at least 13% a year. Such estimate was expressed by Elvira Nabiullina, Head of MED, when she spoke at the Russia Calls! Investment Forum. “Labor productivity will grow by at least 13% annually over three years”, she believes. According to her, engineering, chemical and power engineering companies will be the labor productivity growth leaders.

 The Minister noted that the energy intensity of the economy is to drop by 7% in 2012/2014, i.e. by 2.4%, annually. Labor productivity growth and reduction in energy intensity will be contributed by governmental programs for support of private investments, in particular, those aimed at the infrastructure development. She also mentioned the national monopolies’ investment programs to develop the energy and transport infrastructure, which will “fill in the gaps and create conditions for private investment”.

 Elvira Nabiullina believes that Russia is well positioned to ensure its economic growth of at least 4% p.a. “Our objectives is to make these growth rates even higher”, she said.


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