The Central Bank refused to optimistic scenario in the economy


The Central Bank again rewrote scenarios for the Russian economy. A new baseline scenario, which the regulator publishes on Friday evening, March 18, according to many indicators risk scenario repeats from the previous forecast, made in late 2015. Updated risk scenario of the Bank of Russia implies the preservation of oil prices at $25 per barrel and “the decline of potential growth” and optimistic scenario, the regulator does decide to opt out.

Risk has become the basic

A new baseline scenario Russian economy developed by the Central Bank, proceeds from the annual forecast for oil at $30 per barrel, and “very slow recovery to $40 per barrel in 2018,” — said the head of the Bank of Russia Elvira Nabiullina at a press conference following the meeting of the Board of Directors of the Central Bank. “This scenario is close to our December risk scenario,” she said.

According to Nabiullina, the forecast on the main indicators of the baseline scenario is somewhat better than it was in the December risk scenarios taking into account the more favourable dynamics of the economy and rate of inflation. “We expect a decline in GDP in 2016 by 1.5-1.6 percent — the rate of decline is lower than in 2015 and close to zero growth in 2017”, — she explained. In 2018 the annual growth rate of GDP is forecast by the Central Bank, will be positive. A gradual recovery in economic activity will contribute to the further development of import substitution and the expansion of non-oil exports.

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Inflation in 2016 in the baseline scenario of the macro forecast the Central Bank will slow down to 6-7%. “In the baseline scenario taking into account lags of our monetary policy, we see all the possibilities in order to achieve this goal, including our measures and that we will pursue moderately tight monetary policy,” Nabiullina said. December risk scenario assumed a fall in GDP of 2-3% and inflation at 7% by year-end.

In September last year, the regulator had already rewritten the forecasts made at the end of 2014, then optimistic scenario was close to the stress scenario in the previous report.

New risks

The difference in the scenarios offered by the Central Bank, as before, is determined by the dynamics of oil prices. According to Nabiullina, according to a new risk scenario, oil prices will continue to decline and will become fixed at $25 per barrel over the three-year period. “It’s a different situation for the economy, which means lower potential growth, when you see that prices for export commodities remain low in the long term”, — explained the head of the Bank of Russia.

In this scenario, the figures drop sharply for GDP growth and inflation, said Nabiullina. In risky scenarios incorporated a forecast drop in GDP of 2-3% in 2016. In addition, the Central Bank for the first time made the risk of not achieving the inflation target of 4% by the end of 2017. “In a risky scenario, the forecast of inflation by the end of 2017 is 5.2%. The risk of not achieving the inflation target is quite high,” said Nabiullina.