Russia's Putin warns against economic complacency

Reuters News
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Posted: Apr 20, 2011 6:13 AM
Russia's Putin warns against economic complacency

By Gleb Bryanski and Timothy Heritage

MOSCOW (Reuters) - Prime Minister Vladimir Putin said on Wednesday Russia was emerging powerfully from the global financial crisis but must reduce its reliance on energy and raw materials to see off external threats to its economy.

In his last annual report to parliament before a presidential election in March 2012, Putin said inflation would not exceed 6.5 to 7.5 percent in 2011 and that gross domestic product grew by 4.4 percent in the first quarter of the year.

But he said Russia also faced unspecified external threats to its $1.5 trillion economy and the country of 143 million people could not afford to rest on its laurels after overcoming the worst of the financial crisis.

"Based on GDP, Russia should enter the ranks of the five leading countries," he told lower house deputies, adding that GDP per capita should reach $35,000 by 2020.

"The current beneficial environment in the raw materials and hydrocarbons (markets) should not make us relax. The oil boom we are witnessing only underlines the need to move quickly to a new model of economic development," Putin added.

High oil prices helped fuel Russia's economic resurgence during Putin's 2000-2008 presidency and the price of oil, Russia's main export commodity, is up 28 percent this year.

But Russia's economy is over-reliant on raw materials and any fall in the oil price will have a big impact on its overall economic performance unless it diversifies.

"Economic weakness and sensitivity to external shocks result in threats to national sovereignty," Putin said.

"Let's be frank. In the modern world, if you are weak, there is always someone who will come in and unequivocally recommend which way to go, what policy to conduct, what path to choose."

PRESDIENTIAL ELECTION LOOMS

Putin said Russia also faced a danger of wildfires in Siberia and its far east following blazes that ravaged thousands of hectares of land and killed dozens of people last year during a historic drought.

"Now we are closely watching Siberia and the far east, where a difficult situation with fires is unfolding. One must do everything to minimize the possibility of a repetition of full-scale catastrophes," he said.

The annual report is the last one Putin will deliver to the State Duma before a parliamentary election in December and the presidential election three months later.

Putin, 58, is still seen as Russia's most powerful man after steering successor Dmitry Medvedev into the Kremlin in 2008, and has hinted he may use the March election either to return to the presidency or endorse his protege for a second term.

Putin said last week that it was too early to name a favored presidential candidate and he did not immediately comment on the presidency in his speech to the State Duma.

The government said Putin was expected to speak for about three hours in the Duma, including a question and answer session after the report.

(Writing by Timothy Heritage, editing by Gareth Jones)