Page 35 - RusRPTMar21

3.2 Macro outlook
Growth risks in 2021 are on the upside with little downside. A combination of factors is likely to combine to accelerate growth.
BCS GM base case scenario continues to forecast FY21 GDP growth at 3.3% – even despite a lower than expected decline in GDP in 2020.
The likelihood of weaker growth in 2021 is low in BCS GM’s view – such a scenario is possible in the event of a new global financial crisis (for example, a debt crisis triggered by an increase in inflation and rates) and / or in the event of escalated geopolitical risks and a plunge in commodity prices.
However, at the same time, the bank sees more risks that the Russian economy may grow faster.
Potential new catalysts include higher oil prices (BCS GM forecast for average 2021 Brent price is $51.3/bbl), as well as rising government social spending, which, together with the post-crisis economic recovery, could provide a more significant increase in real income than we forecast (0.4% y/y).
Government-funded (or funded by state-owned companies) investment can also play an important role in post-crisis economic recovery, though there is little clarity in this area. The government has been discussing ways and means of accelerating economic growth for several years now, however we still expect no breakthroughs in the near future in our base case scenario.
Under a bullish scenario of high oil prices and outperforming growth in domestic demand, Russia's GDP growth in 2021 could reach 4% y/y or higher.
The CBR increased its YE21 CPI forecast from 3.5-4% to 3.7-4.2% and upped its average Urals crude price estimate from $45/bbl to $50/bbl following its policy rate meeting on February 12. The bank left its 2021 growth forecast unchanged (3-4% y/y), but noted that recovery is taking place
35 RUSSIA Country Report March 2021 www.intellinews.com