Page 36 - RusRPTJul20

At the same time unemployment will remain at an elevated level of 5.7% this year, up from 4.6% in 2019, before falling slowly over the next two years to 5.4% and then 4.9% respectively.
The fall in oil prices will also put pressure on the balance of payments, but those will remain positive throughout. Russia ran a $65bn trade surplus in 2019 that will fall to a mere $9bn this year before recovering very slowly to $10bn and $27bn over the next two years.
The current account is also expected to half this year to $45bn but the Ministry of Economy offered no forecast on this number. Opinion is divided amongst analysts on what will happen to the current account. The Central Bank of Russia (CBR) said last month that the current account may go negative for the first time in a decade this year after oil prices fell to c.$25, however, more recently analysts at ​BCS Global Markets​ predict that Russia will earn $45bn this year after oil prices recovered surprisingly quickly.
Among the other predictions the Ministry of Economy estimate that inflation at the end of the year will go from 3% in 2019 to 4% this year and stay at that level for the next two years – at the CBR’s target rate.
Amongst the more depressing forecasts is for investment to fall 12% this year from the meagre 1.7% in 2019, but that will recover to 4.9% and 5.6% in 2021 and 2022 respectively. The low level of inflation is the bugbear in Russia’s otherwise strong macro-fundamentals picture. The level of investment is equivalent to 20.6% of GDP in 2019, 20.1% in 2020, 20.7% in 2021 and 21.1% in 2022, but economists say that investment needs to rise above 25% per year if Russia is to breakout of its current cycle of stagnation.
Easing restrictions imposed due to the coronavirus pandemic will create conditions for Russia’s economic recovery already in the third quarter, although GDP decline will continue in the second half of the year, the central bank said on June 3.
The regulator expects that the annual growth rate of GDP will be negative in the second quarter due to the significant impact of restrictive measures to curb the coronavirus epidemic on economic activity.
“The gradual softening of restrictions both in foreign countries and in Russia will create conditions for the restoration of economic activity in the third quarter. Nevertheless, in the second half of the year, the annual rate of economic growth will remain negative,” the report said.
The Organisation of Economic Cooperation and Development (OECD) envisages two scenarios for Russia's recession in 2020 in its latest outlook​. Successful containment of the coronavirus (COVID-19) pandemic
36​ RUSSIA Country Report​ July 2020 ​ ​www.intellinews.com