Russia's economy about to revive

Russia's economy about to revive

The European Bank for Reconstruction and Development predicts the transition of the Russian economy from recession to growth already in 2017.

According to experts, recession will continue to last this year in the country, as oil prices are still low, and the availability of investment in the economy has decreased. The European Bank expects a slowdown in the Russian economy by 1.2% by the end 2016 due to this fact.

However, next year it will show 1% growth. The bank also expects long-term perspective, however, specific figures depend on whether the significant reforms are implemented in Russia. If they are implemented then the economy will grow by 1-2% in the coming years, RIA Novosti informs.

Associate Professor of the stock markets and financial engineering of the Department of Finance and Banking at RANHiGS Sergey Khestanov said in an interview with a ‘Vestnik Kavkaza’ correspondent that "any predictions, especially in conditions of uncertainty of such a factor as oil prices, are rather conditional therefore we should not overstate their significance. " "We clearly saw how oil prices can significantly change such an indicator as the economic growth of Russia after their vibrations. In theory, if oil prices rise to $50-60 a barrel we can see economic growth,’’ he said.

"But in practice, there are no ways to understand how the probability of realization of this forecast is high. Accordingly, we should be very carefully in respect of any projections until the market situation remains uncertain,’’ the expert added.

According to him, Russia's economy has already significantly adapted to low oil prices. "It happened is a long time ago. It was not published in the press, but in February-March 2015 the Central Bank of the Russian Federation refused to support the ruble. From that moment our economy began to adjust automatically to oil prices due to fluctuations in the dollar exchange rate. Therefore the more decisively the RF Central bank, the higher probability that our economy will finally adapt,’’ Associate Professor of stock markets and financial engineering of the Department of Finance and Banking at RANHiGS concluded.

The assistant professor of Stock markets and financial engineering department at RANHiGS Vasily Yakimkin said that the EBRD forecast was logical. "1%  is within the count mistakes in the whole Russian economy. Markets are volatile therefore the economy and the volume of production is also volatile, that is why the growth will be about 0-1%, and maybe even more than 4%. I think that this figure will be by the next year. But I think that it is largely determined by the fact that oil has found its niche and turned back. It will be good if oil prices don’t drop significantly,’’ he said.

"The next point relates to the fact that the Russian industry is still alive, despite imposed sanctions and restricted lending of the Russian economy. Credit lines of foreign banks are still closed for us. The Russian economy continues to live, work. It is great and it is encouraging . Therefore, western experts start considering it as a positive thing. Import substitution has already brought good results in certain sectors: petrochemicals, food, agriculture and so on. These areas are developing very well. Some sectors have shown 40% growth, so I think that all this will continue next year,’’ the expert added.

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