World Economy

Russia Could Miss 2017 Economic Targets

IMF says there are prospects for modest recovery starting in 2017.IMF says there are prospects for modest recovery starting in 2017.

Even with crude oil prices holding relatively stable, a former finance minister in Russia said it will be tough for the oil-based economy to hit 2017 targets.

Russian Prime Minister Dmitry Medvedev said the federal budget was based on oil priced at around $40 per barrel, about $10 per barrel less than the current level, UPI reported.

Central Bank Gov. Elvira Nabiullina said the rate of inflation is expected to be close to its low-end outlook of around 5.5% this year and the International Monetary Fund said there are prospects for “modest” recovery starting in 2017.

Alexei Kudrin, the director of Russia’s Center for Strategic Research and a former finance minister, was quoted by Russian news agency Tass as saying, meanwhile, the budget deficit for this year could be as high as 3.9% of gross domestic product.

“The plan for next year is 3.1%, which will be difficult to fulfill,” he said.

Inflation, however, was running below the target rate, according to the Russian Ministry of Economic Development. GDP, however, contracted 0.7% on annual terms, but down 0.2% on a seasonally adjusted basis for September.

Last month, the Central Bank of Russia cut its lending rate for the second time this year, adding that it’s possible the economy moves out of recession this year. Growth in gross domestic product won’t be any stronger than 1% next year, however.

Sanctions and lower crude oil prices put pressure on the Russian economy, though the government expects investments in the oil sector to expand.

Russian Energy Minister Alexander Novak last month met with his counterparts from major oil-producing countries to review strategies to prop up oil prices by pulling the market back into a healthy balance between supply and demand. A proposal from members of the Organization of Petroleum Exporting Countries to put a ceiling on production levels has so far not evolved into concrete arrangements, however.

Meanwhile, Japan and Russia will set up a working group that includes Japanese firms with cutting-edge technology to improve living conditions in Russian cities by upgrading public transport and waste disposal facilities, sources close to the matter said, Kyodo reported.

The move comes as the two countries work on an eight-point economic cooperation package Prime Minister Shinzo Abe proposed to Russian President Vladimir Putin in May.

The package is believed to be part of Tokyo’s efforts to make progress on resolving a decades-old territorial dispute over Russian-held, Japanese-claimed islands off Hokkaido when the leaders hold their next summit in December, in Japan.

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