World Bank predicts increase in poverty in Russia

The World Bank (WB) has published a new, more pessimistic forecast for the Russian economy. In its baseline scenario the bank expected Russia's gross domestic product to contract by 3.8% in 2015 and by a further 0.3% in 2016, describing medium-term growth prospects as dim.

In its baseline scenario the bank expected Russia's gross domestic product to contract by 3.8% in 2015 and by a further 0.3% in 2016, describing medium-term growth prospects as dim.It explains that Russia has not yet recovered from the two shocks, the fall in oil prices and sanctions, which will triggered a recession in 2015-2016.

 

It explains that Russia has not yet recovered from the two shocks, the fall in oil prices and sanctions, which will triggered a recession in 2015-2016.

The new baseline forecasts assume that the oil price will recover only marginally over the next two years, averaging $53 per barrel in 2015 and $57 per barrel in 2016.

Under a more optimistic scenario, with oil averaging $65 per barrel in 2015 and $68.7 per barrel in 2016, the economy would contract by 2.9% this year and grow by only 0.1% in 2016.

Under the lower-bound scenario, when oil prices average $45 a barrel, Russia's economy is forecast to contract by 4.6% this year.

"The World Bank predicts growth in poverty in Russia for 2015-2016 in all three scenarios. The baseline scenario projects that the poverty rate will rise to 14.0% (20.1 million people) in 2015 and 14.1% (20.3 million) in 2016," the forecast said.