Economic woes in Russia are home-grown - Putin

By Rizza Sta. Ana

Dec 12, 2013 01:10 PM EST

On Thursday, President Vladimir Putin conceded for the first time that the economic problems of Russia were grown at home and also promised that he will fulfill his spending plans he declared last year.

With an audience composed of lawmakers, officials and business leaders, Putin admitted that his administration had done nothing to implement an initiative he promised a year ago to curb flight of capital, which was said to have drained both the Kremlin and investment's coffers. The grim diagnosis by the 61 year-old leader was different from his blaming tactics earlier to trouble offshore, especially Europe's sovereign debt crisis, that had caused harm to Russia's $2 trillion economy.

In his annual address at the Kremlin, Putin said, "We have to be clear: the main reasons for the economic slowdown are not external but internal."

"Russia is among the top-five global economies. However, we lag developed countries by two-thirds to three-quarters on such a key indicator as labor productivity. We must act resolutely to overcome this gap," Putin stated, calling for action to improve Russia's business climate.

Despite a good start in his first two terms as the chief of Russia, the global financial crash of 2008 and the Russian government's reliance on oil prices to keep its books balanced, the state's economic annual growth rates had stunted, had not of consumer spending that kept the economy of Russia ticking over, Reuters said in its report.

With the addition of massive illegal outflows as estimated by a former central bank chief to clock in at $50 billion annually, the Russian government expects its economy to grow a meager 1.4% for this year. Long-term growth was projected at an average of 2.5%.

Widely viewed as the most competent economic policy maker in all of Russia, former Finance Minister Alexei Kudrin blamed Putin for his non-action.

On Twitter after Putin's speech, Kudrin's post read, "It's a shame that so little has been done. The president's proposals for reactivating the economy are a tactical response to the problem. We need a strategic plan to get out of stagnation."

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