IMF improves Russia's economy outlook

Russia's gross domestic product is now seen falling 0.8% in 2016 before growing 1.1% in 2017, the IMF said. In the previous semi-annual report in April, the Fund had predicted GDP would shrink by 1.8% this year and grow by 0.8% next year.

"Russia's economy shows signs of stabilization as it is adjusting to the dual shock from oil prices and sanctions, and financial conditions eased after bank capital buffers were replenished with public funds," the IMF said.

Now Russia is close to exiting recession but its outlook for the next year and beyond "remains subdued given long-standing structural bottlenecks and the impact of sanctions on productivity and investment," the IMF said.

The IMF said inflation, the central bank's key target, will slow further as the impact of a rouble depreciation over the past two years fades. The Fund also said Russia should avoid excessive tightening of fiscal policy even though the economy is expected to return to growth by the end of the year.

The IMF once again called for better financial supervision and more efficient credit allocation, which it said could help the world's largest country by area to secure growth in the medium term, Reuters reports.