OREANDA-NEWS. December 17, 2008. The Russian economy could expand in 2009 under two scenarios with a huge gap between the pessimistic and optimistic versions, executive board chairman of the Institute for Modern Development and VP of the Russian Union of Industrialists and Entrepreneurs Igor Yurgens believes. The upbeat scenario will pan out if China, the most important consumer of Russian export products, manages to maintain economic growth at around 8%, a global lending syste is launched and oil prices jump to USD 60-65 a barrel.

In this case, in the second half of the year Russian businesses will begin to borrow “at conceivable rates”. Yurgens is of the opinion that oil prices could go up, since the USD 35/bbl price is below the cost of production for many oil producing nations, including Kuwait and Iran. In the event of the optimistic scenario, in 2009 the expansion of the Russian economy will be next to zero or 1-2%, the head of the institute believes. Under the pessimistic scenario, China will fail to achieve rapid economic growth and crude futures will not climb above USD 35 a barrel. “In this case, Russia will see GDP fall 10%, unemployment rise and a large-scale crisis take deeper roots” – Yurgens thinks. According to director of the Institute of Economics at the Russian Academy of Science Ruslan Grinberg, the Russian economic model is increasingly vulnerable, as it’s mainly driven by exports. In the past 8 “years of plenty” the structure of the Russian economy has become more rudimentary, he noted. The crisis opens up “a window of opportunities” to replace external demand with domestic demand, Grinberg emphasized.