Russian president Vladimir Putin said on Tuesday that his country's economy is beginning to stabilise and that foreign capital has started to return.
Speaking to a packed conference hall in Moscow, Putin fielded questions on a range of topics including Russian military involvement in Syria, Ukraine, the free movement of capital, and inflation targets.
“The trough of the crisis has been reached and the economy is adjusting itself to the changed environment,” Putin said at the investment forum organised by VTB Capital. Called 'Russia Calling’, the conference attracted more than 2,000 delegates eager to hear how Russia is performing after last year’s slump in the oil price – Russia biggest export.
Putin noted the first quarterly net inflow of capital into Russia in five years, with $5.3 billion coming into the country during the third quarter. “Things are starting to look up,” he said.
That inflow follows the flight of about $416 billion since mid-2010, nearly equal to the economic output of Austria. Putin said Russia’s restraint on not limiting capital flows is one of the reasons foreign money is starting to come back to the country.
Putin said “there are lots of ways to introduce restrictions… none of them are in our plans” even though the depreciation of the ruble and high inflation has had a significant negative impact on Russian citizens.
However Putin thinks conditions for the average Russian man and woman on the street are starting to improve: “Probably by 2017 we will be able to meet the [inflation] target of 4%, can you imagine that 4%” versus 15.7% in September."
His tone was upbeat despite Russia's economic contraction accelerating to 4.6% year-on-year in the second quarter from 2.2% in the first as well as a slide in industrial output and investment.
Syria war of words
Putin was hunched forward during most of the Q&A and sombre but became animated when talking about foreign policy.
When asked how he responded to US president Barack Obama’s comment earlier this month that Russian involvement in Syria was aimed at propping up its only ally in the region, President Bashar Assad, against the so-called Islamic State and other rebels, Putin shrugged to the laughter of the audience.
“We are trying to contribute to the fight against terrorism … all of our actions fully comply with the UN charter, contrary to our colleagues',” he said. Russia launched air strikes in Syria two weeks ago.
He slammed the US’s lack of cooperation on identifying targets for bombing. “At the military level we asked them to give information on targets they believe are 100% belonging to terrorist targets – the answer we got was we are not ready to do that.” Then, Putin said, Russia asked what targets should not be attacked – no answer. “Give us targets we should not pound – no response.”
To be sure, Putin said there is limited technical cooperation such as mutual recognition of friend-and-foe signals “but this is not enough.”
Reconfiguring the economy
Putin said the bulk of the work in reconfiguring the Russian economy for lower oil prices and limited access to foreign capital has been done. However, the government is still looking to pull various industrial sectors out of recession.
“We will do that building on a quite realistic oil forecast of around $50 a barrel,” he said.
On the subject of economic sanctions against Russia after its seizure of Crimea from Ukraine in March last year he said they were damaging to the world economy.
“The economic rules of the [World Trade Organization's] principles are fundamental and unshakeable and should not be related to politics; but that proved not to be the case.”
Putin arrived after the panel discussion was already underway but stayed over an hour-and-a-half on stage. Towards the end of the discussion he also took over from the moderator, Andrey Kostin the president of VTB Bank, who had tried to bring the session to a close.
Putin turned in a more toned down performance than last year when he hurled defiance at the west over sanctions.
This article was updated on October 14 to add more context
