“For the first time in Russia’s history after the fall of the USSR, we have fallen under the consequences of two external shocks immediately: the sharp decline in oil prices and unjustified serious sanctions. Our country has never run into such a collection of challenges at the same time,” Medvedev said in a report before the lower house of parliament.
Medvedev added that these two major challenges were escorted in with Russia's lowering of its investment rating and large-scale capital flight.
Earlier in April, Russian Economic Development Minister Alexei Ulyukayev said the recession will come to an end in the third quarter of this year and the GDP will begin growing in the last three months of 2015 or early 2016.
During last week's marathon Q&A session, President Vladimir Putin said that the Russian economy is on track to recover in less than two years.
“These negative trends will remain throughout this year. In January-March the GDP dropped by 2 percent, the volume of industrial production by 0.4 percent…the greatest decline felt has been noted in investment activity,” Medvedev said.
In his report before the lower house of parliement Medvedev estimated the losses of Western sanctions. “The losses that our economy had sustained are significant, and we are not going to hide them. According to some foreign experts, Russia has already lost 25 billion euro ($26.7 billion, or 1.5 percent of GDP). And it may multiply in 2015,” he said.
The United States, the European Union and their allies have imposed several rounds of anti-Russia sanctions in 2014 over Moscow's alleged interference in Ukrainian armed conflict.
Moscow, denying the accusations, responded with a food import ban on countries that introduced the sanctions.
Russian Prime Minister Dmitry Medvedev is against limiting the operations of foreign trade chains in the country because they give consumers a choice in goods.
"Import substitution is not simply a nice slogan, it's fundamental work that we have initiated lately. It's understandable that we're not talking about full economic self-isolation. I'll give an example. Our colleagues from the [Communist Party] believe that the existence of foreign trade chains is superfluous, but from the point of view of the consumer, the more choices, the better," Medvedev said in a report before the lower house of parliament.
He said that this did not just pertain to foreign chains, but to Russian ones as well.
"We don't only have foreign chains, but we have our own as well that were built from scratch. We remember the shelves of soviet stores. I think that no one wants to return to them, including our communist colleagues," he added.
“Of course, this situation is not beneficial for us, this is absolutely obvious,” the prime minister said. “We will survive, of course. We have learned how to live without an inflow of foreign capital, how to live normally.”
The prime minister also noted that the Russian government focuses on creating favorable conditions for the competitive Russian suppliers.
"And not only on the food market. We are identifying sensitive positions where the import substitution is truly justifiable," Medvedev added.
Russian Prime Minister Dmitry Medvedev at the same time mentioned that the Russian government’s measures taken to stabilize the currency exchange rate has led to the economy gradually adapting to the floating exchange rate of the ruble.
“Last year we began taking the needed measures and many measures were then applied to the Plan of Initial Events, which have already proven effective. The currency market has calmed down and the economy is gradually adapting to the floating exchange rate of the ruble,” Medvedev said in a report before the lower house of parliament.
The Russian economy has deteriorated in recent months due to a major slump in global oil prices and Western sanctions imposed against Moscow over its alleged role in the escalation of the Ukrainian crisis.
Russia's Finance Minister Anton Siluanov said earlier that the recession had passed its peak. In spring 2015, the Russian national currency began to strengthen against the dollar and the euro.
Pessimistic prognoses on the unemployment level in Russia are so far not coming true, Russian Prime Minister Dmitry Medvedev said.
“Of course, the situations in the regions are various. Today’s level of unemployment, which is 5.8-5.9 percent, is just slightly higher than last year’s level. And I believe that it’s very important that we sustain this figure. Today, we can say with assuredness that the pessimistic prognoses on the job market are inaccurate,” Medvedev said in a report before the lower house of parliament.
Medvedev emphasized that the Russian government in January worked out additional measures to support the labor market while the regions have formed their own programs to tackle unemployment.
In 2015 alone, over 27.2 billion rubles [$510 million] will be allocated from the federal budget to organize temporary employment for those who have lost or may lose their jobs as well as to create vocational training and internships, Medvedev stated.
“Russia continues to firmly hold one of the leading positions among world exporters of weaponry. The share of arms exports in Russia’s overall volume, according to preliminary data, for 2014 is 3.2 percent. Revenues have reached a very high level of $15.74 billion. Orders [for weapons exports] today stand at around $49 billion,” Medvedev stressed in a report.
The government has paid particular attention to the development of the defense industry, the prime minister stressed. The share of high-technology production made up 63 percent in 2014 — a growth of almost 10 percent since 2011.
Also Medvedev noted that the Russian federal budget for 2016 will be very difficult and effective cooperation from the parliament will help in finding additional resources to balance it.
“I hope that while working on the budget for next year, which will be very rough, we will work together as effectively [as with the last budget] to find a way to balance it and search for additional reserves,” Russian Prime Minister said.
The Russian parliament worked hard on the federal budget for 2015, adopting latest amendments just recently, the prime minister stressed.
Russia's budget heavily depends on energy exports. Due to a dramatic drop in world oil prices, the country is currently experiencing an economic downturn.