The Russian economy is to start stabilizing after recession during the next year. The GDP growth is expected to be 1.3%. It was stated in the Global Economic Prospects report by the World Bank, released in Washington.
According to the document, in general the World Bank has changed its prognosis for the worse in respect of the economic situation in Russia. Thus, the reduction of the real GDP of Russia in 2016 is to reach 0.7% in comparison with the past year decline in the amount of 3.8%. In comparison with June of the last year, the Bank's forecasts decreased by 1.1% in 2015, 1.4% in 2016 and 1.2% in 2017.
Bank analysts believe that ''the economic activity will be slowed by persistently low oil prices and international sanctions." "Investments are constrained by weak investor confidence, high interest rates and a sharp decline in consumption,'' Tass cites the text of the report.
"The reserve fund may be reduced by about 1/3 by the end of 2016 if it is used as the primary source of financing of the federal budget deficit in this year as had been planned,’’ the WB warned.
According to the reports, oil prices fell by 46.5% in the world (Dubai, Brent and WTI) last year. This year, oil prices will fall by another 8.5%, but in the next two years they will rise by 7.2% per year.
At the same time, WB Chief Economist Kaushik Basu, who told about the new report, pointed out that oil prices will ''rise a little in comparison with current prices." However, the average price for the year will remain at about $49 per barrel. The organization forecasts oil prices of $55 per barrel in June.
According to the Bank estimates, world economic growth was 2.4% at the end of the last year. It is predicted that economic growth will rise to 2.9%, and to 3.1% in the future. All these figures are also reduced in comparison with last year's June forecast. According to analysts of the bank, this is due to a prolonged slump in the emerging markets, which cannot be reflected in the advanced economies. In addition, the situation worsened during the past year due to falling raw materials prices, reduction of international trade and capital flows, as well as an increase in financial volatility. This year may bring serious troubles to the world economy. "The global economy, especially emerging economies, may get into a very large pothole on the road,'' Basu warned.
The bank's analysts are also concerned by the fact that over 40% of the world's poor live in developing countries, where growth rates dramatically fell last year. Governments are recommended making every effort to protect the most vulnerable segments of their populations, focusing on reforms that can mitigate the slowing growth effects.
