OREANDA-NEWS. December 28, 2011. Vladimir Putin's opening address: Good afternoon, Today is December 27. The New Year is approaching and according to tradition, we are summarising the results of this past year. Let's see what we have done to improve the socio-economic situation and to make the economic foundation strong enough to resolve social issues. In general, we have already briefly summed up the results of the outgoing year. Let's discuss them in more detail and say a few words about our future plans.

To start with, the most important achievement of this past year is the consolidation of the trend towards steady growth. The Russian economy has overcome the effects of the crisis and has reached its pre-crisis figures in key parametres. Experts will still have to calculate the exact GDP growth in Russia in 2011 early next year, but it will be somewhere around 4.2%--4.5%, hopefully, closer to 4.5%. This is a good figure compared to that of the world's advanced economies. The Eurozone is finishing the year with a growth of a little over 1% and in the United States the figure stands at about 1.8%. But these are our experts' tentative figures. The final figures are yet to come but I don't think our experts are far off the mark – the figures will be about the same. Our growth is between 4.2%-4.5%. In any event, such growth allows us to reach the pre-crisis levels in major areas. Importantly, we are restoring the pre-crisis scale of industrial production.

In January-November 2011 (we have the figures for this period) industrial production increased by almost 5%. For the year, this figure will be about 4.7%-5%.

This has all had a positive impact on one of the main socio-economic indicators: the labour market or employment. The level of general unemployment has decreased as compared with the beginning of the year. It was at 7.8% early this year, and now it is a bit over 6% (6.3%). The number of people who are officially registered as unemployed has decreased by 400,000. I will cite some figures to show how we compare with other countries. In general, unemployment in the Eurozone is much higher, at about 10.3%, and it is skyrocketing in some countries. All we can do is sympathise with Greece, where it is more than 17%, and Spain, where it is over 22% (22.8% - almost 23%). Of course, it is a very bad situation when almost 23% of people are jobless. The figure is just over 6% for us, which is the result of our concerted effort. I would like to thank you very much for this, and I would like to thank the governors because we could not have achieved this result without the active involvement of governors, leaders of republics and the business community. We must also give credit to the top managers and shareholders of our major companies – they have been very active and responsible in this respect.

Real salaries and wages have increased by 3.4%. This is not much, but it is still more when adjusted for inflation. We recently summarised the results here, and determined that real incomes (not salaries and wages but inflation-adjusted incomes) have grown by a modest 0.5%. These are tentative estimates. Why is there such a difference between the growth of salaries (3.4%) and incomes (0.5%)? Real incomes also include pensions, allowances and the like. Pensions and allowances have been growing this year in accordance with our plans and because of adjustments for inflation. But growth in overall incomes has not been as serious as last year, when pensions within a year increased by 45%-47%. I clearly remember the discussions during that time. Some of my colleagues advised me not to increase pensions by so much in 2010 because it would make more sense to do this in the election year, in 2011.

Let's be straight – we should not be guided by our domestic political calendar. In any event, the Russian government must proceed foremost based on the interests of our people. Of course, expectations are different after the increases of this past year, but we must be honest with our people, and if we had an opportunity to help we had to take it. And, after all, we understand that the political effect would probably have been more substantial now than in the past year, but our people have received higher pensions for an entire year. It was important to support people with modest incomes during the hard times – in 2009 and 2010 – and we have done the right thing by doing this.

After the drought of the past year and a serious decline in agriculture, we have not only restored the performance of the agro-industrial complex but have even improved the figures from the pre-drought year of 2009. Our tentative estimate is that the industry has grown by 17.8% in 2011 but some experts believe that the final average for this industry will be about 20% when all additional figures are considered. The grain harvest is 93 mln tonnes after processing. And the export grain potential has been restored in full.

What else should I add to complete the economic picture? I would like to thank our colleagues from the Central Bank. This has to do with inflation, which I will speak about a bit later. Together with the government, the Central Bank has done a lot in this area, and has approached our currency reserves with great care. Russia's international currency reserves are growing – they are steadily above USD 500 billion, making us third in the world after China and Japan.

Apart from our gold and currency reserves, the government's currency reserves are also on the upsurge. This is our Reserve Fund, the government's Reserve Fund. During the most difficult times in 2009, we used this fund to finance our budget deficit. We assumed it will be brought to zero in 2011, but this did not happen. On the contrary, the Reserve Fund is growing and will reach 1.8 trillion roubles by the end of this year. Our second fund – the National Prosperity Fund – is also doing well. We finance the pension system from it and it is in good shape, with 2.7 trillion roubles. Let me remind you that our oil and gas revenues are accumulated in both funds and they total 4.5 trillion. I should say that the government's Reserve Fund consisted of about seven trillion roubles at its peak. It has become smaller but it is still in good shape in relation to the GDP. It is doing very well! Let me repeat that these incomes and funds are growing. We will have a budget surplus for the first time in two years. We won't have a deficit – our incomes will exceed our expenditures by 0.8% of the GDP. I have just spoken with the finance minister and he said that... (he does not want to say this on the record but hopes I will mention it) we will probably crawl up to a 1% surplus. We will reach 0.8%-0.9% for sure. Moreover, our national debt is one of the smallest. It is just 10% of our GDP, including 2.5% of foreign debt. This is one of the lowest figures in the world. All these facts speak to the stability of our economy.

In general, Russia's foreign trade has increased by about one third this year. Both exports and imports have grown at about the same pace. Our foreign trade surplus has increased by 30% to reach about USD 100 billion.