Russia CB Chief Says Economy in Positive Territory

The Russian economy will be on the positive side of growth even if the price of crude oil falls to $40 per barrel, the Central Bank of Russia said.

Central Bank Gov. Elvira Nabiullina said Thursday the economy stands to exhibit growth this year. The number of economic sectors expected to expand this year is not much greater than those in contraction, but losers are outnumbered. Much of the strength depends on the price of crude oil, however, UPI reported.

“We will be in the positive zone in any scenario, even with $40 per barrel,” she was quoted by Russian news agency Tass as saying.

A November forecast from the International Monetary Fund found the Russian economy had absorbed the shocks from the dual strains of lower crude oil prices and sanctions imposed because of the Kremlin’s role in lingering conflict in Ukraine.

The White House under President Donald Trump has signaled it could ease some of the sanctions pressures for Russia.

For 2016, the IMF said it expected the Russian economy would contract by 0.6%, but grow by about 1.1% this year.

The board of directors at Russia’s Central Bank said Friday they were keeping their key rate unchanged at 10%, adding “internal and external developments” had diminished the appetite for rate cuts this year.

Nabiullina said the rate of inflation is expected to be close to its low-end outlook of around 5.5% this year.

“The higher level of uncertainty in the global economy and international policy is observed in the last 2-3 years. Risks of emerging new ‘black swans’ exist; uncertainty factors will influence on financial markets at large on a going basis. Therefore our attitude towards forecasts is very conservative,” Nabiullina was quoted by Tass as saying.

She explained that the Bank of Russia tries to avoid exaggerated optimism because the regulator can always adjust its policy in case of favorable developments from the standpoint of world’s economy, trade and oil prices growth.

“Considering greater uncertainty, it is always better to be ready for pessimistic developments,” Nabiullina added.

A black swan is an event or occurrence that deviates beyond what is normally expected of a situation and is extremely difficult to predict. 

Last week, the Russian Finance Ministry said it expected the price of oil to oscillate between $40 and $60 per barrel over the next two years.