The Central Bank has lowered its forecast for GDP in 2017

The Central Bank has lowered its forecast for Russia’s GDP in 2017. In the latest issue of the report on monetary policy noted that next year the Russian economy will grow by 0.5-1%. In the previous report, released in June, the regulator pointed out that next year GDP will grow by 1.1-1.4 per cent.

As explained on Friday, the head of the Central Bank Elvira Nabiullina, this forecast assumes conservative assumptions of a low rate of growth in the world economy, the average price of oil near $40 a barrel and preservation of the structural constraints of the Russian economy development”. At the same time, the forecast GDP in 2016 remained unchanged, a decline of 0,3-0,7%. In 2018, the Central Bank expects economic growth of 1.5-2%, the same forecast is given for 2019. The regulator notes that the pace of growth of the economy after 2017 will increase “as a result of recovery in demand due to the easing of monetary policy, conditional on the achievement of target indicators on inflation.”

In late August, the Central Bank reported that it considers the nature of the recovery of the Russian economy unstable. In particular, the regulator stressed that in the second quarter of the current year GDP decreased by 0.6%. The figure was worse than forecasts for a decline of 0.2-0.5%), the Central Bank then explained that the decline in export volume.

In its report Friday, the Central Bank has improved the forecast prices for Urals crude oil in 2016. It was $40 instead of the previously expected $38. In years 2017-2019 price for Urals, according to the Central Bank, will remain at the same level of $40.

On 16 September the Central Bank lowered the key interest rate from 10.5% to 10% per annum. In making this decision the regulator relied on “the slowdown in inflation in line with the forecast reduction of inflation expectations while preserving the fragile economic activity.” Reduce to 10%, according to the Central Bank, enough to ensure a slower growth in prices. The Central Bank explained that the further reduction of the key rate can occur only in the first half of 2017.