World Economy

IMF Lowers Russia’s Economic Forecast

IMF Lowers Russia’s Economic ForecastIMF Lowers Russia’s Economic Forecast

The International Monetary Fund downgraded its economic forecast for Russia as it projects recession of 3.8% in GDP for 2015 and of 0.6% for 2016 in its new analytical research prepared to annual meeting, TASS correspondent reports with reference to informed sources.

In end-June, IMF experts forecasted recession of 3.4% for 2015 and 0.2% growth for 2016 while in April the organization also projected the Russian economy will decline by 3.8% this year.

The downgrade is largely due to recent falls in oil prices on the global markets.

The IMF also expects inflation to reach 15.8% in Russia this year and 8.6% in 2016.

All in all, the fund’s projections are in line with those given by the Russian authorities. The Central Bank said on September 11 it expects recession in Russia to stand at 3.9-4.4% of GDP this year and at 0.5-1.0% of GDP next year. Earlier Russia’s Economic Development Ministry slightly downgraded its projection on GDP decline for 2015 to 3.6% from 3.3%.

The new report will be officially presented by the International Monetary Fund on October 6.

Another report by CNBC says Russia’s recent economic turbulence, weakened the ruble and high inflation could be coming to an end, according to the chief financial officer of the country’s leading telecoms business.

Alexey Kornya, chief financial officer of Russian telecoms giant MTS, told CNBC Monday that “in terms of inflation and ruble devaluation, the worst has already passed,” he said.

Russia’s economy was hit by a 50%-plus decline in oil prices since June 2014 and sanctions imposed by global powers for its annexation of Crimean and role in the pro-Russian uprising in Ukraine.

The combination of both saw capital outflows from Russia increase and the ruble weaken greatly against the dollar, spurring on a rise in consumer prices.

However, analysts are starting to see life coming back to the beleaguered economy and the recession bottoming out. Inflation remains high, however, at 15.8% in August and the ruble remains weak against the dollar, trading at 65.6 to the greenback Monday.