OECD cuts outlook for Russian 2016 economy to 1.7% contraction

MOSCOW, Jun 1 (PRIME) -- The Organization for Economic Cooperation and Development (OECD) has reduced its Russian economic forecast to a 1.7% contraction from 0.4% in 2016 and to a 0.5% increase from 1.7% in 2017, it said in a report on Wednesday.

“Reduced export earnings are cutting imports and investment and severely limiting fiscal policy. The depreciation of the ruble has raised prices, squeezed real incomes, especially of the poorest, and reduced private consumption. Unemployment will continue to rise. Growth is projected to turn positive in 2017 as falling inflation and rising real incomes strengthen domestic demand,” the OECD said.

The oil price uncertainty and no clear plans for structural reforms will make the economic recovery very slow.

The forecast assumes that oil prices will remain at the current level and sanctions will remain in force.

According to OECD, a slowdown of inflation can cause a gradual recovery of demand. The global economic growth and the banking rates decline in Russia will lead to higher exports and investments but unemployment will be higher than before the crisis.

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