Putin: Russian economy at risk from crisis

President Vladimir Putin warned on Monday that the world economy was in crisis and its consequences risked hurting Russia's performance just as the global slowdown did in 2008-2009. Putin ordered Prime Minister Dmitry Medvedev to convene a special meeting of Kremlin and government advisers to come up with a response to a warning that Russia was nearing recession. The Kremlin chief sternly cautioned that "the global crisis is obtaining ever more dangerous contours that will inevitably impact us, too." "This happened in 2008 and this is what we are witnessing today," Putin said. Russia's economy contracted by nearly 10 percent in 2009 in the immediate aftermath of the global financial and economic crisis that began the previous year. The country's banks then betrayed their exposure to dollar-denominated foreign loans that soared in value with the accompanying drop in the global price of oil and collapse in the value of the ruble. Russia's economy was saved from outright ruin thanks to tens of billions of dollars that the government quickly infused into the frozen banking sector and invested in badly struggling industries. But the economic recovery that followed was slow and peaked at just half the rate of the nearly eight percent growth recorded prior to the crisis. The economy today is slipping back from even those modest rates following a disappointing 2012 in which growth came in at a modest 3.4 percent. The economic ministry last week slashed Russia's growth forecast for this year to 2.4 from 3.6 percent amid a slowdown in both industrial output and consumer demand. Economic Minister Andrei Belousov followed that up on Friday by warning that quarterly growth could turn negative by the end of the year. "We are not in a recession yet, but we could end up there," Belousov warned. "There is such a risk," he noted. "I think it will happen in the autumn, if we fail to achieve growth." Putin instructed Medvedev to assemble an expanded meeting of ministers and advisers that could come up with a list of recommended economic cures. Analysts note that industrial production was now down compared with the same period last year while business investment growth was approaching zero. "As for local demand, visible declines in both car imports and car sales last month guide (suggest) that the overall trend for weak consumer data will remain in place," the VTB Capital investment bank cautioned in a research note. Putin's popularity has largely depended throughout his 13-year stay in power on his ability to deliver economic stability and news of an economic souring is coming at a politically sensitive time. The Russian leader has already faced anti-Kremlin protests that emerged just over a year ago, responding with tough political measures to which the West has responded with concern. Putin argued during his meeting with Medvedev that Russia was in fact better prepared to deal with economic troubles than other countries because it was still demonstrating some semblance of growth. "Unlike our friends and partners in Europe and other regions of the world, the Russian economy is still showing signs of vitality and potential further development," Putin said in televised remarks. But he also advised Medvedev to "use all the mechanisms that we have at hand to get us out of crisis." Medvedev is due to lay out his economic vision in an annual address to the lower house of parliament on Wednesday.