Inflation risks in Russian economy exist, but more moderate than expected - minister

ST. PETERSBURG. June 15 (Interfax) - The growth of domestic demand in Russia is being accompanied by an increase in supply, so inflation risks are being realized to a lesser degree than expected, Economic Development Minister Maxim Reshetnikov said.

Domestic demand in the economy "has recovered, even if compared to 2021," Reshetnikov said at a session at the St. Petersburg International Economic Forum on how the Russian economy will develop.

"Our economy is behaving quite properly and working. It has responded to the growth of demand with growth of supply," Reshetnikov said.

"Yes, we're always discussing inflation risks, and they exist, but they are being realized far less and not on the scale that we thought," he said.

"Why is the adaptation happening so quickly? While maintaining macroeconomic stability, we have given sufficient 'monetary oxygen' to the economy. That is, we have combined a fairly fiscal policy with, from our point of view, a neutral monetary policy," Reshetnikov said, commenting on the importance the role of the soft fiscal policy and neutral monetary policy during the crisis period.

"The economy had the money to adapt structurally. And this is one of the key issues," he said. This combination of soft fiscal policy and neutral monetary policy helped both during the pandemic and last year, he said.

"Without this, it will be difficult for us to continue to carry out investments, structural changes and so on," he said.