The world Bank lowered its growth forecast for Russia’s GDP


Moscow. May 23. INTERFAX.RU the world Bank predicts growth of the Russian economy in 2017 1.3% after declining 0.2% in 2016, in November it estimated the increase in GDP this year of 1.5%. This forecast, the world Bank provides in its 37th report on the Russian economy “the Russian economy: from recession to recovery,” released Tuesday.

The reduction forecast in 2017, the WB explains the effect of a higher base. So, Rosstat revised data on GDP for 2015 and 2016, improving the assessment of decline in 2015 from -3,7% to -2.8%, while also revising upward the quarterly estimates for the year 2016 (the first estimate the GDP contraction was reduced to 0.2% from an expected 0.6 percent). The Ministry of economic development laid in the baseline scenario in 2017, an increase of 2%.

Subsequently, 2018-2019 years the growth of Russia’s GDP, according to world Bank experts, will also be moderate at 1.4%. Earlier, the world Bank estimated Russian economic growth next year is more optimistic 1.7%.

In General the Bank expects the improvement in the foreign trade situation, combined with more stable macroeconomic conditions will have a positive impact on the mood of consumers and investors that will restore domestic demand and provide a small growth of the Russian economy in the years 2017-2019.

Global growth in the next three years will be at 2.7% (in 2017) and 2.9% (in 2018-2019).

Stability and consumption

The main factor in ensuring economic recovery is the maintenance of macroeconomic stability, according to the world Bank. Additionally, the predictability of the economic environment increases the return to a three-year budget and the introduction of new budget rules in a modified format.

Also, according to WB, the source of growth in the years 2017-2019 will be the improvement of the dynamics of consumption.

Recovery growth spread to the tradable and non-tradable sector. So, industrial production will increase in 2017 by 1.2% compared to 1% in 2016, experts from the world Bank. In 2018-2019, its growth will be 1.6% and 1.3%. The growth of services after falling 0.9% in the past year will amount to 1.3% in 2017-2018 and 1.4% in 2019. In agriculture, the growth will be 1.2% in 2017 and 1.7% in 2018-2019 (in 2016, the growth was 3.6% due to a good harvest).

WB also causes your estimates of the contribution of various factors to economic growth of the Russian Federation. Thus, the consumption growth of 1.1% in 2017, and 1.6% in 2018-2019 gives 0.7 percentage points to the overall growth of the economy in the current year, 1 percentage point and 1.1 percentage points in 2018-2019. The most significant impact on growth in 2017 (1.5 percentage points) will have a gross capital formation, which, according to the world Bank to increase by 8% (growth by 1.5% and 1.1% in 2018-2019 will give 0.3 percentage points and 0.2 percentage points in the growth of the economy in these years).

Investment in fixed capital will increase by 2% this year, their contribution to economic growth will be 0.4 percentage points in 2018-2019 of the increase will be 2.5% and 3.5%, the contribution to growth of 0.5 PP and 0.7 PP In particular, the Bank points out that government investment can support the world Cup in 2018.

The exports, according to world Bank calculations, will increase in the years 2017-2019 2%, 2.3% and 2.5% respectively, the contribution to economic growth will be 0.6 p. p. 0.7 p. p., 0.8 p. p.

Import growth by 10% in the current year will have a downward effect on the growth of Russia’s GDP, its contribution will amount to 1.5 percentage points In 2018 or 2019 the growth of imports stabiliziruemost at 4%, its negative contribution to economic growth is less significant – 0.6 percentage points and 0.7 percentage points

The price of oil

The world Bank kept their forecast for oil prices in 2017 and 2018 at $55 per barrel and $60 per barrel in 2019, expects its growth to $61.5 per barrel. WB notes the continuing sensitivity of the forecast of economic growth to changes in oil prices.

Thus, the simulated 15% decrease in the price of oil leads to a reduction in growth to 1% in 2017 and 1.2% in 2018 and 2019, a 15% increase in oil prices leads to an increase in growth to 1.6% in 2017 and 1.8% in 2018 and 2019.

“Despite economic measures aimed at reducing the sensitivity to the volatility of oil prices will continue to affect the mood of consumers and producers. We assume that the response of the economy to fluctuations in oil prices in the upward direction will be slightly stronger due to the improvement in investor sentiment,” – said in the report of the world Bank.

Inflation

The world Bank expects the slowdown in consumer inflation to a level slightly below 4% by end-2017 (previously forecast for this year was 4.5%) and its stabilization close to 4% in 2018 or 2019, which corresponds to the target CBR.

“Lower inflation will support real wages, which will be the main source of growth in real incomes, as the pensions will be indexed to inflation. As economic recovery, improving consumer sentiment, wage growth in real terms and improving credit conditions will support growth in consumer spending of 1.8% in 2017 and 2.5% in 2018 and 2019,” – said in the report.

Higher oil prices will support the surplus on current account – is expected to rise from 1.9% of GDP in 2016 to 2.9% of GDP in 2017 ($45.7 billion), 2.7% of GDP in 2018 ($46 billion) and 2.6% of GDP in 2019 ($45.9 billion).

The consolidated budget deficit, according to the world Bank, will be reduced from 3.5% of GDP in 2016 to 1.8% of GDP in 2017 (previous forecast of 2.5% of GDP), up to 0.5% of GDP in 2018 (the forecast was kept), and 0.3% of GDP in 2019.

Account deficit of operations with capital and financial instruments will increase in 2017 to $31.7 billion (2% of GDP), with $15.7 billion in 2016, in 2018 or 2019, it will be reduced to $23.3 billion (1.4% of GDP) and $21.3 billion (1.2% of GDP).

Source