Vladimir Putin welcomed the ruble’s rebound and banks’ stability, saying that Russia is coping with “difficult economic conditions.”
Yet even with an on again off again cease-fire in Ukraine and stabilizing oil prices, the central bank predicts that the economy will shrink as much as 4 percent this year.
Good news? Putin seems to think so. The deluded de-facto ruler of Russia even went so far as to say the sanctions are an effective tool for improving Russian competitiveness.
“We have to use sanctions to move to a new level of development” by steps such as import substitution and promoting local industry, Putin said on a television call-in show Thursday. “We shouldn’t expect an end to sanctions, because it is a political, strategic issue for some partners, containing Russia.”
While the ruble strengthened below 50 against the dollar on Wednesday it plunged past 70 last year.
Top Russian officials are sticking to the script, passing off strangely optimistic forecasts as welcomed good news.
Economic growth may pick up as soon as the second half, Finance Minister Anton Siluanov said Tuesday. Economy Minister Alexei Ulyukayev said April 8 that predictions of Russia’s economic demise are proving to be “exaggerated.”
The reality is that the turn for the better has yet to manifest itself in any key economic indicator. Gross domestic product shrank 1.9 per cent in the first two months from a year earlier. GDP rose 0.6 percent in 2014, the slowest pace since a contraction in 2009. That compares with growth that averaged about 7 percent during Putin’s first two terms as president.