Econ ministry cuts 2018 GDP growth outlook to 1.6–2.1% from 2.1%

MOSCOW, Jun 4 (PRIME) -- The Economic Development Ministry has reduced its forecast for Russia’s gross domestic product (GDP) growth for 2018 to 1.6–2.1% from 2.1%, Minister Maxim Oreshkin said at a meeting in the State Duma, the parliament’s lower house, on Monday.

“At the moment, our range for the GDP estimate for this year is 1.6–2.1% of economic growth. The figure that we had in our March forecast is in this range, the figure is its upper limit. There are risks that growth will be lower. They are significant, but on the whole, 2.1% remains within acceptable figures,” Oreshkin said.

The ministry also reduced Russia’s industrial output forecast to 1.7%, he said.

“This is a plain bad result. The levels that we have now, they are insufficient of course and do not meet those goals set by the president. This is an issue of the efficiency and quality of the industrial policy,” he said.

Russia’s annual inflation will slow down to 2.1–2.2% in June from the current 2.4%, and will amount to 2.7–3.2% in the entire 2018, Oreshkin said.

The ruble rate forecast was revised to slightly more than 60 rubles per U.S. dollar due to an adjusted oil price forecast, he said.

“As to the (ruble) exchange rate, the key adjustments are linked with events on the global market, crude prices. In September (2017) we projected the average annual oil price at around $40 per barrel, and now at slightly more than $60 per barrel,” he said.

The oil price outlook for 2018 was upgraded to $65–70 per barrel from $61.4, he said.

The ministry increased its forecast for real income growth to 3.4–3.9% in 2018.

Central Bank First Deputy Chairwoman Ksenia Yudayeva said at the meeting that the central bank will adjust its GDP forecast for 2018 from the previous 1.5–2%, and it is unlikely to be raised.

“As for economic growth, we are usually somewhat less optimistic than the government…It hard to tell how it (the forecast) will change, but it is unlikely to be upwards,” she said.

Yudayeva said that the regulator raised its 2018 inflation forecast to around 4% from 3–4% projected in March.

The central bank will also increase its baseline oil price forecast from the previously projected $61 per barrel, Yudayeva said.

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