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. Last Updated: 07/27/2016

Putin Says Economy Soft, Growth Fragile

MOSCOW -- The country's economy remains weak and a recent recovery could easily turn to dust if reforms are not implemented to improve the investment climate and encourage free enterprise, President Vladimir Putin said Saturday.

In his first state of the nation address since being elected March 26, Putin told a joint session of parliament that the economy remained inefficient, weighed down by foreign debt and rife with corruption.

"A costly and wasteful state cannot lower taxes. A state supported by corruption, with no clear bounds of jurisdiction, cannot free entrepreneurs from lawlessness of bureaucrats or from the influence of crime," Putin said in a 50-minute speech that will be music to the ears of many foreign investors.

He called for energetic reforms to sustain a recent economic recovery that is expected to lead to growth of up to 5 percent in gross domestic product this year.

The country's economy grew 3.2 percent in 1999 f the first significant recovery in a decade of steady decline that was broken only by a slight 0.9 percent growth in 1997.

Putin said the recovery was largely due to high world prices for Russia's main energy and commodity exports.

The economy has received a boost by the 1998 devaluation of the ruble, which helped domestic producers to compete against imports.

Putin said many domestic enterprises were uncompetitive and would have folded were it not for the devaluation, low domestic energy tariffs, nonpayment of debts and barter deals.

He said long-term growth had to be built on less state interference and greater economic freedom. He also defended private property rights and said the foreign debt burden remained a threat to the state despite several restructuring deals with creditors.

Putin said only an effective economic system, with proper defense of property rights, could ensure stable political development.