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. Last Updated: 07/27/2016

Kudrin Says Russia Still Belongs in BRIC

Skeptics who say the BRIC idea is dead because the Russian economy has fallen much sharper than its emerging market peers will be proved wrong as Russia will show solid growth in the long term, Finance Minister Alexei Kudrin said Monday.

“The whole BRIC idea emerged as a result of an analysis of long-term trends. … If you analyze long-term trends, Russia remains a country with solid growth because of many factors … and will rise to the sixth place among top world economies,” Kudrin said. “Therefore the BRIC countries will remain the main locomotives of the global economy in the coming decades.”

Gross domestic product shrank by a tenth in the first half of 2009 as commodities prices collapsed and capital outflows skyrocketed.

The sharp fall came in steep contrast with the performance of the other BRIC nations — Brazil, China and India — a term invented by Goldman Sachs earlier this decade for a club of top emerging market countries.

Although Russian officials expect modest growth to resume in 2010, the economy is unlikely to return to precrisis levels before 2012, which prompted many analysts to say Russia does not deserve a place among the elite club anymore.

Kudrin said the oil price collapse and extreme overheating of the economy before the crisis were the key reasons for the economic contraction, but added he believed the economy would resume growth with an average of about 3.5 percent a year until 2050.

“Even 3.5 percent makes Russia a major locomotive of the world’s economy,” Kudrin said.

“This should be achievable,” he said. “Russia has shown its vulnerability. The factors are clear to us and if we have good postcrisis policies and restructure our economy, then Russia’s positions will not change much in long-term forecasts,” he said.

He added that to avoid another crisis authorities needed to manage state spending carefully, encourage efficiency, reduce state presence in the real economy and increase its regulatory role.

Budget spending could be cut as much as 20 percent through increased efficiency, and only if Russia fails to do that in the next three years would it be forced to raise taxes, he said.

The much-feared second wave of the crisis would be more likely to come from abroad. “If the U.S. financial sector’s struck by a second wave of the crisis, it could also reach us,” he said.