Transcript of the beginning of the meeting:

Vladimir Putin: Good afternoon. Do you have the latest information on macroeconomics?

Elvira Nabiullina: We have been following this information every month. The most recent figures date back to July. They point to some signs of revival, and I would like to mention them.

Obviously, this is taking place against the current world economic background, and probably I should first say a few words about that because we are largely dependent on what is taking place in the world.

In the last few months, we have seen improving forecasts from international analysts on the world economy. At the beginning of the year, the forecasts just kept getting worse, but recently, analyst forecasts have been looking up. They are giving reasonably positive forecasts for 2010 and the end of this year.

It is not just the forecasts that are improving. The economic dynamics are also getting better in many countries although there are different opinions as to how stable this revival is and how fast the world economy will recover.

In our forecasts and estimates, we proceed from a conservative approach so as not to be over optimistic. In building our economic policy we must consider various potential risks.

Nevertheless, the Russian economy is already showing certain positive signals. This is clear from the figures on the GDP, industrial performance, and investment.

Speaking of industry, if we consider a whole year - from July to July, we will get negative results but we are assessing its performance from month to month without a seasonal correction. Our industrial performance has been positive for the third month running. I am pleased to say that we have positive dynamics in the production sectors. They are even doing a little better than industry as a whole.

During the three months - May-June-July - we had a growth of 2.6%, if we consider month on month growth regardless of a season. This growth primarily started in export-oriented industries and those sectors which are involved in import replacement. In other words, oil products, metallurgy, chemistry, and industrial construction materials showed better results in June. The same applies to the food industry, and to the manufacture of machines and equipment.

Obviously, it is important to consolidate these positive trends. We must increase the funding of loans for industrial production so as to support the budding growth.

World dynamics is not the only factor. Results have also been produced by our anti-crisis measures, the budgetary demand, that is, our budget expenditures, the demand of natural monopolies, and the oil-and-gas sector. It is very important to consolidate these trends.

There is one more positive sign. During the crisis, investment was seriously reduced, but in July there was small growth - 0.3% without a seasonal adjustment.

These positive signs allow us to hope that we have reached the bottom of the economic crisis this summer, and that we have an opportunity to preserve this positive dynamic. In our forecast, growth should be at the level of 3.9%-4.5%. We also hope for economic growth in 2010.

Vladimir Putin: What is the average price of a barrel of oil?

Elvira Nabiullina: Today it is $66, but the average since the start of the year is about $55. It is unstable now, but it keeps growing. From January to July oil prices increased by 1.7 times. This helped a lot, too.

Vladimir Putin: $55 on the average?

Elvira Nabiullina: Yes, this is the average.

Vladimir Putin: We based our budget on $41 per barrel, didn't we?

Elvira Nabiullina: Yes, $41. This was a conservative estimate, and we did the right thing because if the dynamic is better, we will have additional money for expenses. But this was the figure we used.

Vladimir Putin: At any rate, we will receive additional revenue, won't we?

Elvira Nabiullina: Yes. I also think the figures on inflation are good. We had zero inflation in August, and probably, the lowest monthly level of inflation for the first time in many years. We checked - we have not had such low monthly inflation since August 2005.

Vladimir Putin: And this is despite rather serious budgetary injections into the economy.

Elvira Nabiullina: Yes. But this was achieved also because of reduced prices on fruit and vegetables. Last year, we had high inflation - 0.4% in August despite the seasonal reduction but it is dropping now.

We have amended our forecasts through the end of this year a bit. Now we believe that inflation may stand at 11.6% to 12%. It goes without saying that inflation is not only a very important social factor but also an economic one because if we are talking about long-term money, about having our own resource for funding production, and about banks having long-term capital, a decrease in inflation is a very important indicator. We hope to keep inflation at this low level in 2010, I mean at a reduced level.

Vladimir Putin: What level did you plan for?

Elvira Nabiullina: 9%-10% for the next year.

Vladimir Putin: If we preserve these positive trends, this is a realistic goal.

Elvira Nabiullina: Yes, it is realistic. Some analysts believe that inflation can even be a bit lower.

Vladimir Putin: At any rate, it will be a single-digit number, not a double-digit, but a single-digit number.

Elvira Nabiullina: Yes.

Vladimir Putin: This is good.