ST. PETERSBURG, May 23 (RIA Novosti) – Russia is facing similar economic difficulties as other emerging countries and must take care not to repeat their mistakes, Finance Minister Anton Siluanov said during the St. Petersburg International Economic Forum (SPIEF) Friday.
“Russia has similar growth issues as its colleagues in the emerging world,” Siluanov said.
According to the Russian finance minister, emerging countries were earlier seen as drivers of the economic recovery after the financial crisis of 2008, but the trend has changed as these countries have faced a weakening of growth.
“The developed countries gave stable growth and low inflation, in the emerging markets in the contrary growth rates are shrinking and inflation is quite high,” Siluanov said.
He explained that to understand the reasons for the slowdown, two groups of the emerging countries should be defined.
“First is the group of countries that have misbalances of previous years, it is India, Indonesia and Turkey. A current balance budget deficit resulted in tightening monetary policy which in turn slows down growth," the minister said.
He underlined that another group of countries – Russia, Brazil and South Africa – have structural issues. In order to overcome them, Russia needs to conduct careful policy, avoiding the mistakes made by other emerging countries.
"We should not repeat the mistakes of our colleagues in the emerging markets," Siluanov said.
Russia currently is in a strong and stable economic position, and the urgent need is to develop institutions, the minister said.
"We don't print reserve currency, so we have to react differently to the challenges posed by the growth rates. We need to deal with the institutions, this is the only suitable solution for Russia, and other emerging economies," Siluanov said.
Last month, Russian Central Bank Head Elvira Nabiullina announced that capital outflow in 2014 will exceed the central bank's forecast, which stood at $20 billion. Russian presidential aide Andrei Belousov said capital flight from Russia could reach $100 billion this year due to the difficult geopolitical situation triggered by Western sanctions against Moscow over the Ukrainian crisis.
Siluanov responded by promising that Russia will support banks and businesses with large external debts in the event of a financial crisis by dipping into an $88 billion emergency sovereign wealth fund. Economic Development Minister Alexei Ulyukayev added that Russian authorities would take a number of steps to increase the capitalization of the country's banking system if the economic situation worsens.
