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September 15, 2009

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Home » Business » Economy

Russia aims for 4% growth in long term

RUSSIA'S economy has potential to average 3.5 to 4 percent growth in the long term, surviving the current crisis to become one of the world's top economies, Finance Minister Alexei Kudrin said yesterday.

To achieve this, the state must reduce its ownership of businesses and take a prudent approach to spending oil revenues.

"Even 3.5 percent makes Russia a major locomotive of the world's economy," Kudrin told Reuters Russia Investment Summit. "This should be achievable."

Kudrin said that growth of 5-6 percent during years of prosperity would lead to an overall long-term average of around 3.5 percent, when accounting for the lean years.

The economy collapsed by 10.1 percent in the first half of the year as the global and domestic financial crisis curbed domestic demand drastically, weakened the ruble and caused a flight of short-term capital.

Recently, the economy began growing in month-on-month terms, but the growth is minimal. Kudrin, as well as other officials, say it is too early to call the trend stable.

In the long term, Russia must work on establishing macroeconomic foundations that are sound and sustainable.

To achieve that, a series of structural reforms must take place, Kudrin, a 12-year veteran with the finance ministry, said.

Chief among them should be an improved management of the financial markets and an enhanced role for the government as a regulator. At the same time, the government's share in Russia's private sector should be decreasing as the state increased privatization, Kudrin added.


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