The EBRD retained the GDP growth forecast for Russia in 2017 at 1.2%

Moscow. May 10. INTERFAX.RU European Bank for reconstruction and development has maintained its GDP growth forecast for Russia in 2017 at 1.2%, expects growth of 1.4% next year, says the report of the Bank. The Ministry of economic development in the base case predicts the growth of Russian economy by 2% in 2017, the Central Bank is less optimistic and expects GDP growth in the range of 1-1. 5%.

“Russia’s economy returned to growth after a cumulative decrease of about 3% in 2015-2016. At the same time, investment activity remains constrained by economic uncertainty and relatively high financial costs,” – said the EBRD.

The Bank estimates that the Russian economy in the years 2017-2018 will show moderate growth supported by the recovery in oil prices.

“The main risks to the forecast stem from the dynamics of oil prices, lack of reforms of the business environment, support investment, geopolitical tensions and sanctions. Without significant reforms, the long-term economic growth will remain at around 1-2% per year due to the low volume of investments,” the Bank said.

Although the authorities ‘ plans for 2017-2019 years include fiscal consolidation at the level of 1 percentage point annually, the rate of this consolidation remain uncertain on the one hand due to the conservative expectations of the government on the price of oil at $40 per barrel, and on the other hand, because of the need to preserve social spending ahead of the elections. A new fiscal rule is still under discussion and the plans will come into effect from 2019, which should reduce the impact of oil prices on the Federal budget, says the EBRD.