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  Tuesday, December 6, 2022
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The growth of world oil prices harms the Russian economy
The growth of world oil prices harms the Russian economy, a presidential aide said Wednesday. Igor Shuvalov, on a European tour as chairman of an interagency commission on Russia's G8 membership, said current world oil prices were a serious problem for the country. "The current oil price level is very detrimental to the economy," Shuvalov told a meeting with members of the French Association of Diplomatic Press in Paris. He said Russia, which is awash with petrodollars, was experiencing great difficulties in withdrawing surplus money from the economy. With crude jumping to more than $70 a barrel last week, Shuvalov said annual inflation in 2006 was likely to come in at around 10% owing to the rise in oil prices. Without the increase, he suggested the rate could have been kept down to 6%. He said households' expectations of larger government spending in the run-up to parliamentary and presidential elections in 2007 and 2008, a stronger ruble and cheaper U.S. dollar also affected the Russian economy. Shuvalov said the economy would have been healthier and the government would have found it easier to conduct reforms with the oil price at about $30 per barrel. "With this price, we would have been able to fulfill our social commitments to the population and keep industry developing at an expected rate," Shuvalov said.
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