UPDATE: Economic ministry sees Russia’s GDP growing 0.2-1.9% in 2017-2019

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MOSCOW, Oct 11 (PRIME) -- Russia’s gross domestic product (GDP) may grow by 0.2% in 2017, by 0.9% in 2018 and by 1.2% in 2019, according to a baseline forecast by the Economic Development Ministry seen by PRIME on Tuesday in the ministry’s adjusted 2017–2019 social and macroeconomic development forecast.

In 2016, GDP contraction will slow down to 0.6%, the ministry said.

OIL, GAS SECTOR

Still, Russian oil exports may grow in the period by 16 million tonnes by 2019, the ministry said, adding that the share of non-oil and gas exports in the combined exports will increase to 34.9% in 2015 prices.

Oil exports are expected to stand at 256.7 million tonnes in 2016, to grow to 261.7 million tonnes in 2017, to 269.7 million tonnes in 2018 and to 272.7 million tonnes in 2019.

Russia’s natural gas exports will fall to 195 billion cubic meters in 2017 from 196.7 billion cubic meters in 2016, and remain at 195.1 billion cubic meters in 2018–2019. But the average annual gas price for non-CIS states will amount to $169.3 per 1,000 cubic meters in 2017, to $161.7 in 2018, and to $169 in 2019.

The ministry also sees oil production at 544 million tonnes in 2016, at 548 million tonnes in 2017, and at 553 million tonnes in 2018–2019.

But gas production is assumed at 637.8 billion cubic meters in 2016, at 640.5 billion cubic meters in 2017, at 648.3 billion cubic meters in 2018, and at 652 billion cubic meters in 2019.

OIL PRICES, RUBLE’S RATE

The ministry based its baseline forecast on an average annual price for Urals oil at U.S. $41 per barrel in 2016, and at $40 per barrel in 2017–2019. “The level of prices is rather conservative as it is significantly below the consensus forecast for oil prices,” the ministry said.

In its baseline scenario, the ministry also assumes that the average annual ruble rate against the U.S. dollar will amount to 67.5 rubles in 2017, to 68.7 rubles in 2018, and to 71.1 rubles in 2019.

The ministry’s so-called “baseline plus” scenario sees the Urals oil price growing to $48 per barrel in 2017, to $52 in 2018, and to $55 in 2019; while the ruble is seen at 63.3 rubles per U.S. dollar in 2017, at 62.1 rubles in 2018 and at 61.3 rubles in 2019.

MACROECONOMIC FIGURES

The baseline scenario also envisages a net private capital outflow from Russia to reach $18 billion in 2016 and to grow to $25 billion in 2019. But investment activity will stabilize, and an average annual growth of investments is expected at 1.6% in 2018–2019 on the basis of an increase of private investment and contraction of state investment, the ministry said.

But fixed capital investment will contract by 3.7% in 2016, by 0.5% in 2017, and increase by 1.2% in 2018 and by 2% in 2019, the document read.

Russia’s industry output growth may speed up to 1.1% in 2017 from 0.4% in 2016, and to 1.7% in 2018 and to 2.1% in 2019, according to the ministry’s baseline scenario.

The ministry also expects consumer prices to grow by 5.5% in 2016, by 4.3% in 2017 and by about 4% in 2018–2019.

Russia’s unemployment will stabilize at 5.9% in 2016–2017, and fall to 5.7% in 2019–2019. The number of working age people will fall, and workforce will also contract in the period by 1.2 million people to 71.5 million people in 2019 compared with 72.7 million people in 2016, the ministry added.

But the share of Russians whose income is below the living wage will grow to 13.9% in 2016–2017, may slightly increase in 2018, and return to 13.9% in 2019, the ministry said.

TARIFFS

Russia’s gas tariffs for all categories of consumers and for transportation of gas may increase by 3% per year in 2017–2021, the ministry said, adding that the higher tariffs for transportation through the trunk pipeline will not be increased by the level above the increase of wholesale gas prices.

Russian Railways’ tariffs for cargo transportation and for passenger transportation in the regulated segment are expected to rise by 4% per year in 2017–2019, the ministry said.

Power prices for industry will rise 3% per year in the three-year period, but tariffs for citizens will grow by 5% per year due to stop cross-subsidization in the sector. The growth of tariffs for some companies will be different in order to ensure their breakeven results, the ministry said.

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