MOSCOW, June 17 (UPI) -- Even though oil prices remain low compared with 2014 levels, the Russian economy has adapted and is on the path toward growth, the president said.
"We are essentially out of recession," Russian President Vladimir Putin told delegates gathered in St. Petersburg.
For the first time in nearly a year, the Central Bank of Russia last week cut its key interest rate by a half percent to 10.5 percent per year. The bank said growth in the economy was "imminent" with inflation moving toward the target rate of 4 percent by late 2017.
In defending the rate cut, the bank said the worst of the downturn may be in the past as growth starts to take shape. Quarterly growth in gross domestic product is expected no later than the second half of the year. Growth of 1.6 percent in GDP is expected in 2017, the bank said.
"We have created the basic conditions for setting our economy on a growth trajectory," Putin said. "We have ensured macroeconomic stability and substantially reduced inflation."
Putin's optimism contrasts with analysis from the World Bank that said Russia's economy will shrink by 1.6 percent GDP this year before growth returns in 2017. In a global forecast from the World Bank, Russia was singled out as one of the major economies expected to sink deeper into recession.
Lower oil prices are expected to limit Russia's economic recovery, but the economy may become less exposed to commodity prices as it shifts to more productive industries. Putin said the Russian economy still has one of the lowest debt-to-GDP ratios and the economy was adapting to new market conditions characterized by lower oil prices. The Russian financial market, he added, was open and thriving.
"Trading on the stock exchange has grown considerably in some categories of assets," he said. "Importantly, the scope of participation by foreign investors is broadening."