UPDATE: World Bank improves Russia’s 2016 GDP outlook to 0.6% contraction

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MOSCOW, Nov 9 (PRIME) -- The World Bank (WB) has improved its 2016 outlook for Russia’s gross domestic product (GDP) to a 0.6% decline from 1.2%, it said in a report published on Wednesday.

“In 2016, the economy is projected to contract by 0.6%, and grow by 1.5% in 2017 and 1.7% in 2018, as hydrocarbon prices are forecast to continue recovering and positively affect domestic demand,” the World Bank said.

The previous 2017 GDP forecast stood at 1.4%.

The estimate is based on a U.S. $55.2 per barrel oil price on average in 2017 and a $59.9 one in 2018.

The bank said that this upsurge in economic growth will be unfavorable for diversification. The natural resource price volatility and structural limits will remain a threat to the Russian economy.

Russia’s imports replacement policies have not affected economic growth and production factor redistribution significantly.

Russia’s budget deficit is forecasted at 4.2% of the GDP in 2016, 2.2% in 2017 and 0.6% in 2018, suppressed by spending reduction.

Inflation will amount to below 6% in 2016 and will reach the target of the Russian central bank of 4% in 2017. As a result, consumption will rise 2% in 2017 and 1.6% in 2018.

The poverty level, which is expected to be 13% in 2016, will fall to 12.2% in 2017 and 11.8% in 2018.

Chief Economist of WB Apurva Sanghi said at a press conference after the report release that Russia will be unable to escape the retirement age increase.

Deputy Economic Development Minister Alexei Vedev said that the ministry sees the World Bank’s 2017 growth forecast as realistic, although the ministry’s own basic forecast envisages an only 0.6% rise.

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