Get the latest updates as we post them — right on your browser

. Last Updated: 07/27/2016

Premier to EU Exporters: Russia No Comfort Zone

Prime Minister Mikhail Kasyanov told journalists on Tuesday in Germany that Moscow was no longer interested in providing favorable import conditions and called on foreign companies to set up production in Russia if they want to sell their goods here.

"We cannot shut out imports, but we are worried about the growth of imports and we will not be creating comfortable conditions for them," news agencies quoted him as saying. Kasyanov said he has articulated Moscow's position to foreign investors during his two-day visit.

Russia's external trade turnover in the first nine months of the year grew 5 percent over the same period last year, but imports grew 12 percent -- eight times faster than exports, which grew just 1.4 percent, according to the Economic Development and Trade Ministry.

Consumer goods accounted for the bulk of the import growth, reflecting the country's rising demand and disposable incomes.

Kasyanov said that stimulating domestic manufacturing is part of the government's mission to structurally transform the economy in order to reach an average annual economic growth rate of 5 percent to 6 percent over the next three to four years. The economy is expected to grow approximately 4 percent this year.

For that to happen, however, massive investments in the manufacturing sector are required to alleviate what most economists say is an overdependence on natural resources.

But a weak domestic banking system, stock market and insurance industry is keeping many domestic investors on the sidelines.

"That's why at the moment we want to attract foreign capital in manufacturing," Prime-Tass quoted Kasyanov as saying.

Kasyanov said that if European companies want Moscow's support, they should transfer their production to Russia.

Kasyanov's remarks come a day after Moscow Narodny Bank's benchmark PMI index showed that Russia's manufacturing sector failed to expand in November for the first time in four years, as both output and demand slowed.

Paul Timmons, a London-based economist at the bank, said that although the manufacturing sector is desperate for investment, Kasyanov's remarks are not going to help lure investors.

"Russia needs to inject capital flows into the domestic industry, primarily through foreign participation, but to attract investment you need a strong and judicial base, which Russia doesn't have at the moment," Timmons said.