Naryshkin Says Oil Could Slow Growth

Kremlin chief of staff Sergei Naryshkin warned on Thursday against economic complacency but said that if sensible policies were continued then Russia could be one of the world's top five economies by 2020.

Naryshkin, who was appointed President Dmitry Medvedev's chief of staff earlier this month, told the ruling United Russia party that economic stability was not guaranteed forever.

At the meeting, which was closed to foreign media, Naryshkin warned against "implanting in the consciousness that the economic stability we have achieved has been given to us forever.

"High oil prices do not give a guarantee of macroeconomic stability," Naryshkin was quoted by United Russia as saying. "A fall in prices is possible, a fall in the oil price which would lead to the destabilization of the entire economy.

"To prevent a crisis we need a balanced, cautious budget policy, which will be based on that money, which has been earned through the growth in labor productivity."

Russia's nominal gross domestic product soared to $1.7 trillion in 2007 from less than $200 billion in 1999, the first year of the current boom. Until then, Russian gross domestic product had halved since the collapse of the Soviet Union.

U.S. investment bank Goldman Sachs predicts that Russia's economy will overtake Britain, France and Germany over the next few decades to become the biggest economy in Europe.

Naryshkin said Russian per capita GDP would reach 70 percent of the equivalent level in the United States by 2030. At present, Russian per capita GDP is just 16 percent of the U.S. level.

Critics say forecasts about future Russian economic growth might fail to take into account problems, such as endemic corruption, soaring prices, possible future political instability and the massive investment needed to boost oil and gas production.

Naryshkin said labor productivity was increasing and that Russia had set itself the task of being one of the world's top five economies by 2020.

Naryshkin was quoted by United Russia as saying the ruble could become a world reserve currency and that Moscow could also become a world financial capital.

But he said volatility on world markets and the risk of a global recession were major concerns. A major domestic concern was accelerating inflation, which was 11.9 percent in 2007.

"The main indicators of Russian economic development remain favorable, and Russian financial authorities are carrying out a very precise and cautious budget and monetary policy," he said. "The task is to stand our ground in the coming world recession."