Forecasts see smaller slide for Russian economy than earlier

BOFIT Viikkokatsaus / BOFIT Weekly Review 2016/30

Both the IMF World Economic Outlook update released this month and the July consensus forecast of various major forecasters see Russian GDP contracting around 1 % this year. Forecasts published in late spring and early summer were somewhat cooler, although the Central Bank of Russia already at that time projected the GDP would only drop about a half a per cent, and the economy ministry drew up an even milder outlook. Several forecasts expect the volume of Russian imports to contract 4−7 % this year.

A major factor behind the improved outlooks is an almost across-the-board upward revision of the oil price assumption. Forecasts now put the average price of oil this year in the range of $40 to $45 a barrel, with the price climbing to $45−50 in 2017. Notably, Russia’s economy ministry and the central bank are offering a slightly more cautious assumption of $40 a barrel.

In addition, economy ministry estimates show Russian GDP this year fell only 0.9 % y-o-y in January-June, which was less than previous forecasts. Economic contraction was smaller on brisk growth in oil output, but it seems the GDP slide was mitigated especially by a milder fall of inventories, after inventories had declined strongly for a couple of years. This picture emerges from the first quarter GDP data and the wholesale sector that recovered through last spring.

Forecasts for Russian GDP growth in 2016 and 2017, %
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