ANALYSIS – Russia acknowledges financial crisis has hit hard

MOSCOW (Reuters) – Russia had convinced itself — and the outside world — that its huge oil wealth and vast foreign exchange reserves made it much less vulnerable than others to the global financial crisis.

But after weeks of virtual silence by state media about the effects the crisis has had on Russia, President Dmitry Medvedev has suddenly acknowledged the extent of the damage.


“In all likelihood, the crisis is going to spread. Here we have to face reality,” he said on Tuesday.

Top bankers and businessmen say Medvedev’s words amounted to an official acknowledgement of what they have sensed in recent weeks — a sudden, dramatic slowdown of the economy as credit dried up, sales slumped and factories laid off staff.

“We had thought that Russia would be far less badly hurt by the crisis than other major economies,” said one leading Russian banker, speaking on condition of anonymity.

Reuters