Putin: Russia cannot be isolated and sanctions are harmful to all

October 13, 2016 Kira Egorova, RBTH
The Russian president has spoken out on the futility of trying to isolate Russia through sanctions and expressed his belief that any restrictions in the sphere of economy dictated by politics are harmful for all.
 Vladimir Putin
Russia's President Vladimir Putin pictured during a plenary session as part of the 8th VTB Capital Russia Calling! Investment Forum, Oct. 12. Source: Mikhail Metzel/TASS

Russia cannot be isolated from the rest of the world because of its size and place in the global economy, said Russian President Vladimir Putin during his speech at the Russia Calling! VTB Capital investment forum in Moscow on Oct. 12.

"As for the isolation ... They don't have enough motor resources and gasoline even to go around all our borders! What isolation [can this be] when we talk about Russia?" said Putin, reacting emotionally to a question from the audience about the possibility of new sanctions against Russia over the situation in Syria.

Any restrictions in the sphere of economy that are dictated by political considerations are harmful for all, Putin said. At the same time, he did not deny that the Russian economy is feeling the negative impact of Western sanctions.

"And, above all, I see a threat in technology-transfer restrictions," he added.

Russia has stabilized

According to Putin, the country has managed to achieve "sustainable macroeconomic stabilization" of the Russian economy in recent years, which is primarily reflected in the Central Bank's success in reducing inflation.

Moreover, at year-end 2016, inflation will reach a historical low in Russian modern history, and will fall below 6 percent.

"At the beginning of October 2016, the year-on-year inflation rate accounted for 6.4 percent, despite the fact that this figure had fallen to 15.7 percent in the same period of 2015," Putin said, noting that in 2017 the Central Bank will seek to achieve the stated inflation target of 4 percent.

Other signs of stabilization, according to Putin, include a reduction in the volatility of the national currency and an increase in the Central Bank's international reserves, which amount to around $400 billion today. "As of January 1 of this year, it was $368 billion," the president said.

The net inflow of foreign investment into the non-financial sector has tripled to $3.8 billion during the first eight months of 2016, while the net outflow of capital from Russia has been cut five times from $48 billion to $9.6 billion compared to the same period last year.

However, Putin sees the optimization of the budget and increase in its effectiveness as a big challenge for the government. "[We] managed to balance the budget for 2017 with a 3-percent deficit; this is an acceptable level even among the world's leading economies," he said.

Oil and work with Asia

According to Putin, the freezing of oil production at its current level is in the interests of not only Russia but also the world economy as a whole.

"If OPEC countries agree on freezing among themselves, we will join this decision," he said, adding that the main intrigue today concerns what quotas Iran and Saudi Arabia will agree.

According to the president, the trade turnover between Russia and the countries of Asia and Latin America today is only 28 percent, but "there is a tendency toward improvement." At the same time, the diversification of Russia's relations with Asia-Pacific countries is underway.

Putin pointed out that investment flows are moving in both directions, both into Russia and from Russia to Japan, South Korea, China and South-East Asia. For example, 2016 saw a growth of trade turnover with Vietnam.

The future of investments in the Russian economy lies first and foremost in the sphere of high technologies and the training of qualified personnel, said Putin. According to him, the development of this area will be contributed by the transfer of new technologies to new countries, which at the moment is restricted by sanctions.

Read more: Putin cancels visit to Paris as France made it clear 'It's not the time'>>>

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