World Economy

Russia GDP Will Decline to 1-2% in 2016

Russia GDP Will Decline to 1-2% in 2016Russia GDP Will Decline to 1-2% in 2016

Russia’s economic growth is set to stand at 1-2% in 2016, rather than the previously forecast 2.3%, the country’s Economic Development Minister Alexei Ulyukayev said Tuesday.

“In 2015, we expect a (GDP) decline of 3.3%,” Ulyukayev told reporters, adjusting a previous forecast of a 2.8% decline, Sputnik reported.

“We are adjusting 2016 as well,” he added, stating that the GDP growth is likely to range from 1-2%. According to the minister, IMF’s 0.2% growth forecast for Russia is too pessimistic.

The ministry has lowered its oil price forecast for 2016 from $60 to $55 per barrel, Ulyukayev said. “Based on the forecast of an average oil price of $55 next year, we believe that the average ruble rate against the dollar will be a little better than this year,” he said.

Global oil prices have been on a downward trend beginning last year, from an average of over $100 per barrel. This week, Brent crude prices reached six-year lows, hovering at slightly lower than $43. As one of several resource-rich countries reliant on oil exports, Russia has had to contend with the price slide attributed to oversupply and reduced worldwide demand.

Speaking to reporters at the East Asia Summit in the Malaysian capital Kuala Lumpur, Ulyukayev said the Russian economy had “bottomed out.” He forecast that Russia’s national currency, the ruble, would stabilize as soon as oil prices “seek out a new equilibrium.”

The minister added his 2015 estimate for capital flight was at $93 billion, due to slow down to $70 billion next year. His revised inflation forecast at 11%, in comparison to the previous 11.9%.