Deputy Economic Development Minister Andrei Klepach went and did it. He said the "R" word. "A recession has started already, and I'm afraid it may last longer than two quarters," Interfax quoted Klepach as saying on Friday.
The daily "Vedomosti
" promptly reported that that "The business community is glad to hear the government acknowledging the problem." To bolster their the-authorities-finally-get-it narrative, the paper cited an unidentified Cabinet source as saying: "Any and all tough decisions made by the government in order to avert the crisis will now be understandable and justified."
Not so fast, says Klepach's boss.
While Prime Minister Vladimir Putin didn't quite say "the fundamentals of our economy are strong," he did say
he was "sure our economy is solid enough to weather the period of instability." And in case anybody missed the slap down, the Kremlin's press service issued a statement instructing journalists that they should pay attention to Putin's statement, and not Klepach's.
Deputy Economic Development Minister got the message and walked back his comment, saying that what he meant was that Russia is entering a period of slower economic growth -- but not a recession.
Technically, Klepach's original recession comment was in fact wrong. Economists define a recession as two consecutive quarters of negative growth. This has not happened -- not yet anyway.
But what the flap illustrates clearly is that Russia's rulers are more than a bit perplexed by the global economic crisis, and even more perplexed about how to talk about it with their citizens.
A good example was Putin's live televised call-in session with Russian citizens last week. In response to a question about what will happen to the ruble, Putin responded that there would be "no sharp fluctuations" in the exchange rate. The Central Bank, meanwhile, has been steadily devaluing the ruble
Meanwhile, as Reuters reports
, a real recession could be on the way early next year:"Russia's Q3 GDP growth at 6.2 percent year-on-year was still positive. But analysts say Q3 could have been the last quarter of positive growth, and that both Q4 2008 and Q1 2009 could be negative -- two successive quarters amounting to recession."
-- Brian Whitmore