Global Oil Market Slump Key Threat to Russia – Medvedev

Oil Well file photo

DAVOS, January 23 (RIA Novosti) ­ The danger of a global slump in the raw material markets remains a key threat to the Russian economy, Prime Minister Dmitry Medvedev said on Wednesday.

That means the Russian economy remains vulnerable to negative changes in global markets, the premier told the World Economic Forum in Davos.

“That is why we continue to be concerned over stagnation and the banking crisis in Europe, debt problems in the US and China’s structural risks. This theme without doubt will be at the center of [attention of] the G20 Group during the whole of this year,” Medvedev said.

Russia took over the rotating G20 presidency on December 1. Russian G20 Sherpa Ksenia Yudaeva previously said the theme of investment-driven growth would underpin Russia’s presidency.

Russia is not interested in excessively high world raw material prices because they impede the development of both the Russian and global economies, Medvedev said.

“But too low prices lead to the other extreme: a shortage of resources to ensure sustainable economic growth. Today’s [oil] price level is more or less close to optimal both for producers and consumers,” Medvedev said.

World prices for Brent crude have been hovering at around $110 per barrel in recent months.

The Russian economy’s dependence on raw material exports is great, but is also exaggerated, Medvedev said when asked what Russia would do without its abundance of petrodollars and if it would be ruined without it.

“Of course, it would not be ruined,” Medvedev said, adding the Russian economy’s growth in the past few years had been mostly due to increased output of consumer goods and services rather than oil and gas revenues.

In the longer term, the Russian government’s policy should lead to a considerable growth in exports of food and intellectual services, Medvedev said.

“I’m sure in the future they will be in no less demand than oil and gas today.”