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Benedicte Gravrand, Opalesque Geneva:

The International Monetary Fund (IMF) forecasts a growth of 4.3% in 2011 and 4.1% next year with inflation at 7% in both years for Russia, even when it is benefiting from high oil prices; the country used to have average growth of 7% before the credit crisis. Juha Kähkonen, IMF Mission Chief for Russia, said the organisation projects that if economic policies are not strengthened, Russia’s growth might drop below 4% in the medium term. To lift it, the country should focus more on policies that would promote economic stability and should rely less on oil. There is also a need for monetary policy to focus on inflation, for better oversight of the financial sector, and for a better business climate. The Euro area crisis and the global economic slowdown are the two main risks the country should look out for; even though it is not very exposed to European debt, European banks might find it difficult to create funding for Russian banks. And a global downturn would mean a fall in oil prices, which would reduce Russia’s exports, budget revenue, and trigger a recession (see IMF video).

This was echoed by Odd Per Brekk, senior resident representative in Russia for the IMF, at yesterday’s JetFin conference in Geneva. He said now is a good time to take a longer term view ......................

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