Russia's economic recovery cannot yet be considered sustainable and there could be a rise in unemployment as well as a plunge in oil and commodities prices this autumn, a top Kremlin aide said on Saturday. "It is not a sustainable recovery yet in Russia or globally because it is based on massive government and central bank intervention," Arkady Dvorkovich told the Valdai discussion group of Russia experts.
Officials expect the economy to grow by 3.9-4.5 percent in the second half of 2009 from the first half, when Russia's GDP shrank by a tenth, the worst on record. The fall came in deep contrast with other emerging economies such as China, India or Brazil, which continued to grow. The fall in commodities prices pushed Russia's budget into deficit territory for the first time in a decade in 2009 and next year the country wants to borrow as much as $20 billion to cover the budget gap of almost $100 billion.
However, the deficit forecast for 2010 was cut to 6.8 percent from an originally expected 7.5 percent on expectations of higher oil prices. Dvorkovich warned against excess optimism. "We are still very cautious about projections over the next few months. A rise in unemployment and a drop in commodities and oil prices are possible in the fall," he said adding he was ruling out a possibility of big social unrest in the country.
"I'm doubtful about the likelihood of any massive social unrest. In most cases there are ways to keep the current production going and ways to create new jobs with even small investments," he said. Russian jobless rates were unchanged at 6.3 million people or 8.3 percent in July after hitting a peak of almost 10 percent earlier this year, which prompted officials to disburse billions of roubles of aide to firms across the country. The trend could change again as many enterprises such as car maker AvtoVAZ are planning new waves of lay-offs amid falling consumer demand in Russia.
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