UPDATE: Russian min says economic growth to restart in July 2016

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HELSINKI, Apr 13 (PRIME) -- Russia’s economic growth will likely restart in July, and annual gross domestic product (GDP) dynamics will be near zero in 2016, Economic Development Minister Alexei Ulyukayev said at a meeting with Finnish businessmen on Wednesday.

The economy is in a “shaky balance and is waiting for a start,” Ulyukayev said. “We think that the Russian economy will reach a phase of some growth somewhere in the middle of the year, maybe in the second half of the year.”

“I do not expect growth this year. On a quarterly basis it will be this way: in the first quarter, the decline was 1.8%, in the second quarter, it will be within 1%, in the third – a zero, in the fourth quarter we will have growth of 1.2–1.3%,” he said.

In accordance with the official ministry’s forecast, the GDP will grow 0.7% in 2016, but the estimate was based on an oil price forecast of U.S. $50 per barrel. According to earlier media reports, the ministry is preparing a new version of the forecast saying that this year GDP will decline 0.3%, and there will be a 0.5% downturn on average from 2015 till 2018.

The minister said that in 2017, the economy will rise 1.5% and in 2018–2019, by about 2–2.5%.

According to Ulyukayev, the ministry hopes that Western sanctions will be lifted in the near future.

The minister said that the ruble has more chances to strengthen than to weaken in the short term because of the country’s trade surplus.

The capital outflow will continue to fall and will reach $30–40 billion as of the end of 2016, he said.

He cut the inflation forecast to 6.5–7% in 2016 from up to 8%.

Ulyukayev urged the central bank to continue reducing the key rate. He said that inflation is decelerating and “The situation with the liquidity in the economy of the banking system has changed dramatically at the beginning of the year. Whereas there was a liquidity deficit in the banking sector until February and banks had to turn to the central bank for help… there is no deficit now.”

The central bank kept the interest rate at 11% for the ninth straight month at the last meeting in March.

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