Russian institutions in rare public discord over economy

Russia’s economic authorities have clashed over inflation and growth forecasts in rare public displays of discord at a flagship forum in Saint Petersburg.

The annual Saint Petersburg International Economic Forum (SPIEF), often dubbed the Russian Davos, is taking place against a background of Western sanctions on Moscow over Ukraine.

“There’s no question for the moment of a risk of deflation,” Interfax news agency quoted Alexey Zabotkin, deputy governor of the Bank of Russia, as saying.

“For the moment, we have an increase in prices of 16.7 per cent year on year,” he was quoted as saying, referring to annual inflation. However, Minister of Economic Development Maxim Reshetnikov disagreed.

“We are seeing deflation for the fifth consecutive week,” he said, adding it was “not necessary to measure inflation year on year”.

“We are really slipping into a deflationary spiral, we must take that seriously.”

Russia’s central bank on the one hand, and the ministries of economic development or finance on the other, are some of the only Russian institutions to occasionally disagree publicly.

On Thursday, former economy minister and current Kremlin adviser Maxim Oreshkin had also voiced disagreement with central bank chief Elvira Nabiullina.

Oreshkin sharply took issue with what he sees as an excessively pessimistic growth forecast made in April by the head of the national audit office, showing GDP slumping by more than 10 per cent this year.