UPDATE: Russian economy to start growing very soon – economic minister

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MOSCOW, Jul 19 (PRIME) -- The Russian economy will start expanding very soon, Economic Development Minister Alexei Ulyukayev said Tuesday at a meeting with Japanese businessmen.

The ministry’s baseline forecast envisages Russia’s GDP falling 0.2% in 2016 if the oil price averages at $40 per barrel, but Ulyukayev previously said that if the current prices are maintained throughout the year, GDP may even slightly grow in 2016.

“Rates for ultimate borrowers are falling, and the general result is that the situation in the real sector of economy is improving. Last year, industrial output fell 3.7%, but the fall shrank to 1.2% in the first quarter of this year, and narrowed to 0.8% by May,” he said.

“We expect GDP dynamics to switch to positive figures very soon.”

He added that industrial output started growing in May.

Net private capital outflow will be significantly smaller than the expected U.S. $35 billion this year, and or there may be no outflow at all, as the ministry has registered an inflow of capital since May, he said.

“It amounted to a small figure of $2.5 billion in May–June, but this is already a different picture. This is about foreign investment, both direct and portfolio, as they started to grow,” he said.

“This is about Russian capital, as for the three consecutive quarters outflow of Russian capital has turned out to be smaller than the inflow…The offer of foreign currency is growing on the internal currency market compared with demand, which improves position of the ruble.”

The ruble is likely to continue growing due to a better balance of payments, he said.

“Remember that capital outflow from Russia amounted to U.S. $153 billion in 2014, it fell in 2015, but nevertheless, it was significant – $57 billion,” the minister said.

Russian banks may receive a 500 million ruble–1 trillion ruble profit in 2016, which is a serious achievement, he added.

Ulyukayev also said that oil prices may grow, but it will growth will be insignificant. The oil prices bottomed out at $24 per barrel in January. “Now, the Urals blend costs $44, and all forecasts indicate a possibility of marginal price growth.”

(63.1154 rubles – U.S. $1)

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