World Bank: Sanctions to curb Russia access to foreign capital ’15-16

MOSCOW, Apr 1 (PRIME) -- If Western sanctions against Moscow over the Ukrainian crisis are preserved, they will continue limiting Russia’s access to foreign capital markets in 2015 and 2016, the World Bank (WB) said in a report Wednesday.

“The oil price slump and stricter sanctions came late in 2014, so that their impact only began to affect the economy in the final quarter of 2014, the effects are likely to be more profound this year and in 2016,” the World Bank said.

“The isolation from international economic activities, such as trade and bank transactions, which are pivotal to a country’s growth, have proven to be very damaging for the targeted economies.”

In the report, the World Bank has changed its outlook for the Russian economic development to a 3.8% contraction in 2015 from a 0.7% slide. In 2016, Russia’s gross domestic product (GDP) will shrink 0.3%. Both estimates are made in accordance with the baseline scenario including a U.S. $53 per barrel oil price. Inflation will stand at 16.5% on average in 2015.

The Russian government earlier forecasted a 3% economic contraction in 2015, close to the World Bank’s optimistic scenario where oil prices are $65 a barrel. The World Bank says that in this case the economy will fall 2.9%.

There is also a pessimistic scenario, implying that oil prices are $45 per barrel and the economy contracts 4.6% in 2015.

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