Putin Says Economy “Stable” Due to High Reserves

Russian President Vladimir Putin said at a meeting with Bank of Russia officials on Tuesday that his country is financially stable despite U.S. and EU sanctions, with higher reserves and falling dependence on oil being the key factors, TASS news agency reports.

“The financial market remains stable. That is thanks to the joint actions of the government and the Central Bank. Our foreign exchange reserves have increased by 5.7 percent since the beginning of this year and are already at $459 billion,” Putin said.

The central bank and the government have been working together to slash oil dependence in the Russian economy, which reflects in lower inflation and a more stable ruble, according to the first deputy chairman of the Bank of Russia, Sergey Shvetsov.

Russian foreign reserves consist of foreign exchange, special drawing rights (SDR) holdings, the reserve position in the IMF, and monetary gold. They reached their highest level before the global crisis of 2008 at $598 billion.

The economy shows growth, too, Putin noted. “In general, the picture in the Russian economy is generally positive. Industrial growth for eight months amounted to 3.1 percent, including manufacturing production that grew by 3.8 percent,” the president said.

Putin also noted the consistently low inflation and unemployment. “In August, unemployment fell to 4.6 percent, which is a record low, and inflation in September was 3.4 percent.”

Analysts from Dutch bank ING shared the positive outlook on the Russian industry sector.

“Current mood in the Russian real sector is stable, at least in the short-term, as the recently published Bank of Russia data indicates a gradual acceleration in corporate lending growth to 9% year-on-year in September (adjusted for FX revaluation effects) from 5% year-on-year as of mid-year and zero growth in 2017. We take this as an indication that the Russian corporate sector may have intensified local borrowing as a substitute for the declining foreign debt,” ING said on Monday.