With Russia’s growth slowing President Vladimir Putin is shuffling his economic team.
The new economy minister is Alexei Ulyukayev, who has moved over from the deputy position at the central bank.
The man he replaces – Andrei Belousov – becomes Putin’s economic adviser as the president draws around him people who favour greater state action to revive the weak economy.
Ulyukayev told Putin the government’s primary task will be to avert a recession – based on grim numbers.
The economy managed 4.3 percent growth in 2010 and 2011, it fell to 3.4 percent last year and the International Monetary Fund predicts a far from impressive 2.5 percent for this year.
The new head of the central bank Elvira Nabiullina was Putin’s economic adviser, and before that economy minister.
She is under pressure to cut interest rates, and is open to the idea if inflation does not rise. She told reporters: “I would say the policy of keeping inflation under control should continue, but that has to take into account new challenges, new trends in our economy as a whole.”
Nabiullina added: “Slowing economic growth is a reality that the central bank will need to consider.”
The new central bank governor has warned that monetary stimulus could end in a toxic combination of stagnation and inflation, and she has criticised calls for a weaker rouble.
Inflation hit 7.4 percent May from a year earlier, way above the central bank’s five to six percent goal.
Meanwhile, the rouble continues to slide – it has fallen by more than five percent this year against the dollar-euro currency basket that the central bank uses for its calculations.
Russia’s biggest weakness remains its heavy dependence on revenues from the sale of oil and gas.
Energy prices are also slipping, which make it more difficult for Putin to meet his domestic spending promises.
With oil priced in dollars, the weaker rouble does help – but not enough.