Russian Finance Minister Alexei Kudrin admitted on Friday that the economic growth achieved in the country during the past decade of boom was impossible to maintain.
Striving to double GDP was a priority for President Vladimir Putin, who presided over eight years of non-stop growth until 2008, when he was succeeded by his ally Dmitry Medvedev. Putin set a target in 2000 to achieve the goal in 10 years.
Kudrin, viewed in the West as a key liberal, told an economic conference in Moscow that the fast growth maintained mainly on the back of high energy prices exposed Russia to additional risks after the country experienced a financial crisis in 2008. For the first time in 10 years, Russia recorded budget deficit in 2009.
"We nearly doubled [GDP]," Kudrin, a key member of Medvedev's anti-crisis team, told an economic conference in Moscow. "But it turned out to be a different kind of doubling [GDP], which is hard to maintain right now."
Medvedev is aiming to modernize the economy by promoting hi-tech industries and services to reduce dependence on the energy sector. He views modernization as the main element of Russia's exit strategy.
Kudrin warned that the share of the oil and gas sector in the Russian GDP is expected to fall to about 14% or below in the coming 10 years from the current 25%.
He added that development of innovative institutes, which are not yet effective enough, and profitable macroeconomic parameters, which will allow the reduction of crediting rates of the real economy, are essential for a qualitative growth.
Kudrin said he expected the global economic crisis to continue, and that further surprises should be expected. He added that Russia's recovery from the crisis will be slow.
"In line with our forecasts, GDP will come back to the pre-crisis level in 2012," the Russian finance minister said.
He said budget austerity was a must for Russia.
"We do not have the scope to increase spending," he said.
MOSCOW, January 22 (RIA Novosti)
