Russia 2011 growth 4.2%

Saturday, 14 January 2012 00:00 -     - {{hitsCtrl.values.hits}}

MOSCOW (AFP): Russia’s growth ticked up to 4.2 percent in 2011 from 4.0 percent in 2010, making it one of the three best-performing major economies in the world, Prime Minister Vladimir Putin said Thursday.

“Russia is in third place among the major economies of the world, behind only China and India,” said Putin who also cautioned that 2012 would be tougher due to economic turbulence around the world.

Russia’s economy has been helped over the last year by relatively high oil prices and cautious fiscal policies which have spared it the budget crises endured by several of its euro zone partners.

Putin said Russia had a budget surplus of 0.8 percent of Gross Domestic Product in 2011, making it one of very few larger economies not to be in deficit.

He said the country’s foreign currency and gold reserves were still high at over $500 billion, the third highest in the world after China and Japan.

But Putin -- who is seeking to reclaim the Kremlin in 2012 polls after his four-year stint as prime minister -- warned that this year would be tougher for the economy due to the external situation.

“The worrying signals that we are getting from the world’s leading economies should make us work very seriously to ensure the interests of our citizens,” he said.

The relatively rosy macro-economic data announced by Putin contrasted with troubling figures showing the extent of capital outflows from Russia over the last year that highlight the challenge facing the government.

Russia last year suffered net capital outflows of over $84 billion, the central bank Thursday, as domestic political turbulence and the global economic slowdown rattled investors.

The net private sector capital outflow was $84.2 billion, considerably worse than the $33.6 billion leaving the country in 2010 as Russia recovered from the global economic crisis, the central bank said.

The figures are considerably worse than Russia expected for 2011. Even in July, the Kremlin was predicting net outflows of just $35 billion.

Analysts say that Russia is suffering as an emerging market at a time of increased global economic turbulence when investors traditionally put their money in the safest havens.

But economists have long criticised Putin for failing to implement reforms to encourage private business and end corruption that would encourage the injection of more foreign capital into the country.