VLADIMIR PUTIN
ARCHIVE OF THE OFFICIAL SITE
OF THE 2008-2012 PRIME MINISTER
OF THE RUSSIAN FEDERATION
VLADIMIR PUTIN
ARCHIVE OF THE OFFICIAL SITE
OF THE 2008-2012 PRIME MINISTER
OF THE RUSSIAN FEDERATION
VLADIMIR PUTIN
Transcript of the beginning of the meeting:
Vladimir Putin: Let us start with macroeconomics and then perhaps you could tell me about your trips.
Elvira Nabiullina: About the economic situation as a whole: We
are approaching the end of the year and we have the latest aggregate
data for the 3rd quarter. Speaking about the economy as a whole, the
growth of GDP, the 3rd quarter registered a slight growth (1.1%) on the
2nd quarter.
Vladimir Putin: That works out at 0.5% a month?
Elvira Nabiullina: Yes, it varies between 0.3% and 0.8% from month to month. We have had a slight growth over five months, adjusted for the seasonal factor.
One of the main factors is export-oriented industries and they started contributing to GDP growth back at the end of the 1st quarter. They include metallurgy, chemistry, and petroleum products. These industries have slowed down a bit, but new growth factors have emerged.
Above all, this is agriculture, which performed very well in September-October, a growth of 5.4% in September and over 11.7% in October, adjusted for the seasonal factor.
Vladimir Putin: Eleven percent?
Elvira Nabiullina: Yes, that is October on September adjusted for the seasonal factor. These are final data.
It includes the warm winter factor, because of which harvest was brought in later than usual, and livestock has registered a major growth: 18% October to October. That is a very big figure. We see the results of investment projects that were launched earlier and supported by government programmes. We already see feedback in the livestock industry.
Retail trade, following a slight increase of incomes (we saw a slight rise of real incomes in October) is boosting consumer demand. The growth is not great yet, but it is growth nevertheless. And that is another important factor.
Construction is the third factor. It was the sector hardest hit by the crisis. In October it reported a growth of 2%, net of the seasonal factors. We have revised slightly upwards the construction of new housing. We had expected to introduce about 54 million square metres of housing floorspace by the end of the year, but now we expect it to be 60 million, or between 58 and 60 million, because the rate of commissioning of new housing in January-October was roughly the same as last year. That is not a bad result either.
Measures to support mortgage and regional housing construction programmes have played an important role. We see the effect of support of demand on housing construction. We know that it drives many other sectors and of course it is important to keep moving in this area.
That said, there are some things that give cause for concern. First of all, it is investments. The decline here has stopped, but we see no growth, no confirmed growth, 0.03% adjusted for seasonality.
Vladimir Putin: You mean investments in fixed assets?
Elvira Nabiullina: Investments in fixed assets.
Vladimir Putin: Is any capital flowing in?
Elvira Nabiullina: There is an inflow of foreign capital. But what is particularly important for us is investment in fixed assets; we need "long money" and corresponding resources and motivations. Of course, maintaining investments is a comprehensive problem, but it is very important.
As a result we have seen a considerable drop in investments in January through October, more than 18%. The world crisis of course has affected investor confidence and expectations.
Industrial output has been unstable in October, a drop of 1% adjusted for seasonality. (Before that there was a slight rise). The most affected sector, unfortunately, is the processing industry, where production of machines and equipment dropped by 2.6%. In general machines and equipment is a very volatile sector; even before the crisis it had ups and downs. That's how it behaves, unfortunately. But that is also very important for maintaining growth. We have to move forward with industrial production.
Inflation is a key factor. We saw zero inflation during last week. In November prices were up 0.3%. You will remember that in November 2008 it was 0.8%. The accrued inflation from January to November is 8.4%, compared with 12.3% in 2008. In other words, that factor has slowed down substantially.
We have updated assessments to the end of the year of how the economy will develop. We believe that production growth can be sustained. Our assessments for the 4th quarter are 2% growth net of the seasonal factor. The annual inflation rate will be about 9% and perhaps...
Vladimir Putin: Less.
Elvira Nabiullina: It could be even less. Certainly much less than in 2008, when it was 13.3%.
Vladimir Putin: It is the best figure since 2006.
Elvira Nabiullina: Yes, single digit inflation is what we call it. Still, industry will be down 11.5%. Agriculture will be in the positive zone. We expect agriculture to grow by abut 0.5%. We also expect real incomes to grow.
Vladimir Putin: Actually, the figure should have been even higher in agriculture. Our grain harvest last year was over 100 million tons.
Elvira Nabiullina: It was a very large crop.
Vladimir Putin: 107-108 million, I think. It is big enough this year too, but it is less than last year, 93 million. But the real agricultural performance indicators are even better than we see on paper.
Elvira Nabiullina: Yes, the indicators are very good. As a matter of fact, the way agriculture support programmes were designed sets an example for other sectors. We see a comprehensive approach: On the one hand the financing of government programmes, and on the other, measures to protect the domestic market. This is a comprehensive approach with modernization of sectors. We see that many sectors are improving labour productivity. Of course, it is very important for agriculture. We expect to achieve good results in the future.
Vladimir Putin: A plus.
Elvira Nabiullina: So far we have been speaking about the economic situation, the numbers. But of course quality matters too.
Vladimir Putin: Yes.
Elvira Nabiullina: You often ask about modernisation and high technologies. It is important now to implement the decisions we have made. We are preparing for that. One of the topics we are working on is small and medium-sized businesses. We keep it constantly under review. The latest decision was to allocate an additional 7.5 billion. We have held all the tenders and are in the process of remitting the whole sum to the regions.
Vladimir Putin: How much was it this year? Was it 12.5?
Elvira Nabiullina: It was 10. Last year the federal budget initially earmarked 6.2 billion to support small business.
Vladimir Putin: And then we added some more.
Elvira Nabiullina: Then we added a little over 4 billion and then 7.5 billion. We also transferred 30 billion through Vnesheconombank.
Vladimir Putin: 30 billion? 30 plus 10.5, right?
Elvira Nabiullina: That already makes 18 billion.
Vladimir Putin: That's if you include the 7 billion.
Elvira Nabiullina: Yes, together with the 7.5 billion. So we have greatly built up our support. We see some results in the shape of jobs preserved. In the regions where the share of small business is large their budget revenues turned out to be more stable.
Vladimir Putin: Are the regions working jointly with us in that respect?
Elvira Nabiullina: Yes, they are. They have been much more active this year. This programme has been ongoing since 2005. Some regions were more active than others, especially the regions which had large revenues from other sources.
Vladimir Putin: The governors rightly see it as an anti-crisis measure.
Elvira Nabiullina: But the budget for next year envisages 10 billion. We would like to restructure the programme in this way in order to support small business in the production sector and innovative business.
We are aware that some programmes concerning grants for start-up businesses, job support, will be retained, but we would like the programme to do more for modernisation and innovation.
