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Saturday, March 25, 2017

World Bank revises Russian growth outlook

The World Bank released its updated growth predictions for Russia on Tuesday.

The bank's revisions increase the outlook for 2014 to 0.7 percent from 0.5 percent.

The increase can be attributed to a strengthened net export value. In the past few months, imports decreased because of higher prices, which lead to substitutions as a counter to the depreciating ruble. While this did accelerate manufacturing in the country, weaker demand will most likely not sustain this growth into 2015.

“Growth is projected to stall in 2015 at zero percent as the sanctions would continue to negatively impact investments and would lead to a further slide in consumption growth," World Bank Lead Economist for Russia Birgit Hansl said. "If geopolitical tensions subside and the overall external environment of Russia improves, in 2016 the positive effects would allow for growth of 0.5 percent."

Growth is expected to fall in 2015 from 0.3 percent to zero from the bank's prediction in September. The drop is due to recent announcements of oil prices being estimated to decrease approximately $15 less per barrel, leaving the average at $85 per barrel.

Also consequences of sanctions will become more apparent in the next year, investment growth is expected to fall because of limited capital resources and consumption growth will likely hit a standstill.

According to the World Bank, the outlook report is subject to downgrade further, depending on the oil industry and what prices turn out to be.

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