The World Bank anticipates a 3.8 percent contraction of the Russian economy in 2015, reflecting lower global oil prices and the impact of Western sanctions on the country.
The World Bank anticipates a 3.8 percent contraction of the Russian economy in 2015, reflecting lower global oil prices and the impact of Western sanctions on the country. However it is more optimistic for the Russian economy in the coming years.
Next year, contraction will slow down to 0.6 percent, while in 2017 the Russian economy will recover to a 1.5 percent growth rate, according to World Bank’s latest Russia Economic Report, issued Wednesday.
The bank also expects the Russian ruble to strengthen to 58.2 rubles (about 13 percent) to the US dollar in 2017, with capital outflow reduced to $67 billion.
The report praised the Russian authorities for successfully stabilizing the economy and called for sustained structural reforms. There is an opportunity for Russia to benefit from a structural transformation of its economy in the longer term, according to the report.
“The policy response by the authorities successfully stabilized the economy. Monetary policy prevented costly delays in relative price adjustments, highlighting the importance of the central bank’s commitment to inflation targeting in the context of a flexible exchange rate regime,” the World Bank lead economist for the Russian Federation and the main author of the report Birgit Hansl said.
Maintaining fiscal sustainability will become an especially pressing challenge in the light of low oil prices, according to the report. This will also be necessary for the proposed 2016 budget.
