LONDON, May 4 (PRIME) -- The European Commission has worsened its forecast for contraction of Russia’s 2016 gross domestic product (GDP) to 1.9% from 1.2% and improved its 2017 growth forecast to 0.5% from 0.3%, as seen by PRIME on Tuesday in the commission’s Spring 2016 Economic Forecast.
The geopolitical situation, low oil prices and the central bank’s monetary policy will remain the key factors for the Russian economy, the commission said.
“Downside risks to the outlook are related to a possible prolongation of sanctions throughout 2017, which would worsen economic confidence and a further delay investment recovery,” the forecast read.
The European Commission also improved its forecast for Russian inflation in 2016 to 7.5% from 8.5%. “Limited price pressures are expected to resume later in 2016 amid increased fuel excise duties, with an average annual inflation remaining at 7.5% before falling to 5.4% in 2017 (i.e. closer to the Bank of Russia’s medium-term target of 4%),” the commission said.
On April 29, the Economic Development Ministry said in its general forecast that it expects GDP to contract by 0.2% in 2016 and rise by 0.8% in 2017.
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