Page 25 - RUSRptApr17

presented by Minister Maxim Oreshkin.
This makes an optimistic forecast at the upper band of earlier unofficial estimates of 1.5-2% , revised from previous expectations of 0.6% GDP growth. Standard & Poor's expects two years of recession to end with 1.5% growth in 2017 , after only 0.2% GDP contraction was seen in 2016 versus 1% decline expected.
The new forecast still provides for a decline in the oil price from current levels down to $40/bbl by end 2017, implying an annual average Urals price of $45.6/bbl (vs. $40/bbl in the previous version).
The average annual RUB/USD rate forecast for 2017 was improved from 67.5 to 64.4 , although this outlook still implies weakening of the exchange rate from the current RUB/USD 56 to an average of 66 in April-December 2017.
Projected GDP growth for 2017 was boosted from 0.6% y/y to 2.0% y/y,
while budget deficit expectations were improved from 3.2% to 2.0% of GDP.
Russia's finance ministry has "ambitious goals" of bringing the country's economic growth into line with the world's average growth level of at least 3-3.5%, Finance Minister Anton Siluanov said on April 26. To boost the economy, which contracted 0.2% in 2016, Russia needs to implement structural reforms and, first of all, reduce its dependence on oil exports, Siluanov said. Siluanov said another way to spur the economy was to improve collection of taxes by solving an issue with Russia's large shadow economy. The shadow sector payroll exceeds RUB10 trillion ($177.73bn) a year, he said.
Russia’s economic growth rates will stabilize at the level of 1.5-2% even if the oil price goes down , Central Bank Chief Elvira Nabiullina on April 5. "The potential economic growth (rates) amount to 1.5-2% if there are no structural transformations. How fast we will reach this potential growth rate (level) depends on the oil price, growth may be faster, but whatever the price of oil, without structural transformation we’ll stabilize at the economic growth level of 1.5-2%," she said. High oil prices within up to $60 per barrel range will not contribute more than 1%age point to GDP growth, she added. "The dependence of Russia’s economic growth rates on the oil price is not very high. A high (oil) price within the range of $40 and $60 (per barrel) will add around 1%age point to the growth, not more," she said.
Economic Development Ministry revised macro forecasts for 2017
PREVIOUS UPDATED
Urals price $/bbl 40 45.6
RUB/USD, annual average 67.5 64.4
GDP, % YoY 0.60% 2.00%
Budget balance, % of GDP -3.20% -2.00%
Budget oil and gas revenues, % of GDP (GPB estimates) 5.80% 6.20%
Source: Vedomosti, Gazprombank estimates
25 RUSSIA Country Report April 2017 www.intellinews.com