The Russian economy will shrink in 2016 by 1.5%, and next year will grow by 1%, says the report of the IMF mission in Russia. The recession will continue due to low oil prices, weak growth in household incomes and fiscal consolidation, said the experts of the Fund.
The resumption of growth next year, the IMF links the stabilization of oil prices and the improved financial situation of the country. According to the report, the economic contraction was smaller than in previous cases due to the package of measures taken by the authorities, including the transition to a flexible exchange rate, liquidity growth in the banking sector, limited fiscal stimulus measures and the abandonment of strict regulation.
The mission noted the significant slowdown in inflation due to the weakening of economic activity, tight monetary policy and measures to limit income growth. According to the Fund the increase in consumer prices will rise before the end of the year around 6.5%, and their growth will continue to decline in the direction of the reference point identified by the Central Bank.
Among the main risks for the implementation of the IMF forecast indicated a drop in oil prices below the expected level, fiscal imbalances and the weakness of the banking system, unable to provide a sufficient volume of loans for investment purposes.
The Fund encourages the Russian authorities to implement structural reforms to provide the necessary investment. To do this, in the opinion of IMF experts, the necessary institutional improvements aimed at reducing administrative pressure on business and protection of property rights.
The report also refers to the need to improve the structure of the labour market by improving the mobility of the population and of achieving a balance between demand and supply, as well as raising the retirement age. The Fund advises to continue investing in the innovation sector of the economy, in energy systems and in transport infrastructure.
In the April issue of “world economic Outlook” the IMF experts estimated the reduction in Russia’s GDP this year to 1.8% expected in 2017, the moderate growth of 0.8%.
According to the Minister of Finance Anton Siluanov, inflation for the year will not exceed 6%. The Forecast Of The Bank Of Russia By 6-7%, The Ministry Of Economic Development Is 6.5%. The Central Bank aims to reduce inflation by the end of 2017 to 4%, and the Ministry of economic development expect that it will be 4.9%.