Page 21 - RusRPTJuly18

3.0 Macro Economy 3.1 Macroeconomic overview
The updated forecast of the Ministry of Economic Development envisages the growth of the Russian economy in 2018 in the range of 1.6-2.1%, Economic Development Minister Maxim Oreshkin said.
The previous forecast of the Ministry of Economic Development envisaged GDP growth this year by 2.1%. As a result of the revision, this bar is preserved, but as the upper limit of the range. According to Oreshkin, in 2018 Russia's GDP could exceed 100 trillion rubles.
Russia will see limited near-term economic gains from higher oil prices because of prudent monetary and fiscal policy under the country's improved policy framework, Fitch Ratings said on June 14 referring to the reinstalled fiscal "budget rule" that limits state spending. Most recently the Finance Ministry reiterated that it is not going to revise the "budget rule" amid suggestions it increase the cut-off baseline oil price to $45 per barrel to allow for more budget spending.
Fitch maintains that boosting weak medium-term growth prospects is a key challenge for the new government, while cutting the GDP growth forecast slightly for 2018 and 2019 to 1.8% and 1.9%, respectively, from 2% for both years. The agency attributed the downward revision to lower-than-expected GDP growth in 2017 and the first quarter of 2018. "This is despite the rise in oil prices, driven by supply shocks and robust demand," Fitch commented. Oil price forecasts were revised by Fitch upwards to $70 a barrel in 2018 and $65 per barrel in 2019, up from previous forecast of $57.5 per barrel for both years.
Inflation in 2018 is forecasted by the Ministry of Economic Development at the level of 2.7-3.2%. The average annual dollar exchange rate this year will be just over 60 rubles. / $, Expects the ministry.
In the new forecast, the price of oil will be laid at about $65-70 per barrel instead of the current $43.8 , Oreshkin said.
According to Rosstat, in 2017 the Russian economy grew by 1.5%. The central bank earlier forecasted in 2018 the growth of the economy by 1.5-2%.
The consensus is that the Russian economy will expand at around 1.7% a year , according to Russia’s the Higher School of Economics Development Centre latest Consensus Forecast, which aggregates projections for Russia’s economy from 22 professional forecasting organisations in Russia and abroad (see table).
Whether as a result of inertia or offsetting factors (higher oil prices due to geopolitical tensions), the forecasters in aggregate have not revised down short-to-medium term projections as a result of the April US sanctions, despite the fact that they affected new sectors.
Analysts continue to see Russia’s growth potential at around 1-2% a year
in the short and medium term, in line with the conclusion reached by IIkka Korhonen of the Bank of Finland in 2015.
Growth of 1.7% a year to 2024 would actually represent a pick-up in performance from the past decade – in 2008-17 the economy expanded by just 1.1% a year. Nevertheless, it is likely to well below Vladimir Putin’s target
RUSSIA Country Report July 2018 www.intellinews.com