President Vladimir Putin has insisted the rouble will stabilise but the economic crisis could last for two years. Speaking at his tenth annual news conference in Moscow today, Putin said: “Under the most negative external economic scenario, this situation can last two years, if the situation is very bad, we will have to change our plans.”
After the news that the Russia lost control of its economy earlier this week after an interest rate hike by the Russian Central Bank failed to stop the collapse of Russia’s currency, the rouble, Putin blamed “outside factors” and said that the central bank could have acted sooner.
Putin accepted that Russia has failed to diversify its economy, which has faced declining oil prices and sanctions over the Ukraine crisis. However, he said that Russia’s currency reserves are sufficient enough to maintain the stability of the economy and that the central bank should not use up its reserves which currently stand at $419bn.
Putin told the conference that he does not believe the nation’s situation should be called a crisis. “I don’t believe you can call it a crisis – you can call it what you like.” He also said that if the economic problems persist then the government will have to reduce social spending and future growth.
The rouble’s collapse came after a dramtic 6.5 percentage point rise in Russian interest rate to 17 per cent. Since the crisis there have been reports that Russian’s have been racing to spend their money on cars and home appliances before prices go back up.
In a bid to escape soaring interest rates and the collapsing currency, it has been reported that wealthy Russians have been ‘panic buying’ luxury properties in the London areas of Belgravia, Knightsbridge, Mayfair and Regents Park and according to several estate agents their Russian clients are willing to spend a minimum of £20m on a property.
Since President Putin annexed Crimea from Ukraine in March, Russia has been put under sanctions by the West. The sanctions were imposed by the West due to Putin's actions in the Ukraine, which include the seizing of territory and refusing to investigate the shooting down of a civilian aircraft. Putin said that he is hopeful that the conflict with Ukraine can be solved through peace talks. He also said that he urges the Ukrainian Government and pro-Russian rebels to conduct a quick “all for all” prisoner swap before Christmas.
By Nicole Miskelly, bobsguide Lead Journalist