Measures to spur domestic and foreign investment topped the agenda of round tables at the VTB Capital Investment Forum which was held in Moscow under the catchy title Russia Calling!
The shifting of economic activity to the East is changing the current economic landscape. However, the economic problems experienced by Europe and the US will not have a strong influence on Russia. A statement to this effect was made by Russia’s President Vladimir Putin.
"The country’s state debt is around 10% of the GDP, while the debt to foreign investors is just 2.5%. Russia’s gold and currency reserves have reached $522 billion. Inflation has dropped below 7% to 6.1%, which is the lowest level in the past 20 years."
Such a good economic performance makes Russia attractive for investments, says Neil McKinnon, a former Treasury employee.
According to the International Monetary Fund, a small amount of foreign debt makes Russia attractive for long-term investments. This doesn’t mean that Russia is immune to crises – elements of economic recession will make themselves felt in Russia as well. But on the whole, the situation in Russia is fairly good.
Russia’s accession to the World Trade Organization marks an important step forward in the development of economic ties. Since the country’s own production falls under the government’s protection program, all fears regarding the country’s fledgling industry make no sense, Deputy Finance Minister Alexei Moiseyev says.
"The government has adopted measures to protect domestic producers where they could sustain losses as a result of WTO membership. But these protective measures are temporary. Permanent protection leaves no room for modernization. This is an economic truth substantiated by a large number of examples. For this reason, the government’s measures to adjust Russia for the WTO will gradually be reduced to zero to make way for the modernization of the Russian production sector."
Russia’s major benefit from WTO membership will be the country’s integration in the world financial mechanisms, VTB Capital senior economist Maxim Oreshkin said.
"Unlike China, moving businesses to Russia doesn’t promise enormous gains. That’s why many companies will think twice before taking their businesses to Russia. Russia’s accession to the WTO comes in handy because companies located in Russia will be able to supply local plants and assembly plants in other countries. The main benefit from Russia’s membership in the WTO is that it will become part of the global financial mechanisms."
The country’s defense industry is getting adjusted to the new conditions as well, Deputy Prime Minister Dmitry Rogozin said.
"Russia should look to the world market for promoting its products so that other WTO members would opt in favor of Russian-made goods. The government is now planning to pursue the same agenda in shipbuilding."
With foreign and domestic investment being high on Russia’s agenda, economists deem agriculture and innovations the most lucrative sectors for investment. The financial sector is also considered a “tasty morsel”. VTB President Andrei Kostin comments on priorities facing this sector.
"The top priority is the capitalization of the banking sector and risk reduction. Even though the banking sector is functioning normally, we should learn from the bitter experience of the past and be stress-resistant in case things get worse. President Putin said that the government had prepared a “safety cushion” for banks. We must see to it that we remain unaffected by whatever negative situations come along."
The VTB Capital Investment Forum brings together the cream of world economists for the 4th time. The first such forum was held following the most powerful wave of the 2007-2009 economic crisis. This time, economists are unanimous about the pessimistic outlook for the future and admit that the world is entering a new economic era in which the dominating role will belong to the East. Russia, which is located between the West and the East, has a good chance to extract maximum profit from the new economic arrangement.