The International Monetary Fund (IMF) predicted Thursday that the Russian economy would contract by about 1.5 percent this year before experiencing moderate growth in 2017. In a report published Thursday, the IMF said it sees Russia's economy "growing again in 2017 by about 1 percent."
This latest prediction is more optimistic than the IMF's previous forecast for Russia, which said the economy would contract by 1.8 percent this year and only grow by 0.8 percent next year. Russia has seen its economy slump into a profound recession on the back of the fall in oil prices and Western sanctions over Moscow's role in the Ukraine conflict. "The Russian economy continues to adjust to the dual shocks of lower oil prices and sanctions," the report said. "The economic contraction is nonetheless shallower than previous recessions."
But the IMF warned that Russia's medium-term prospects "remain subdued" in part due to a weak oil price outlook and the lingering impact of Western sanctions on economic activity. The IMF also said that long-term growth was "likely to settle around 1.5 percent." "In the medium term there is a significant need for fiscal adjustment and this will continue to drag on the economy," said Ernesto Ramirez Rigo, the IMF mission chief for Russia.
Russian state statistics published earlier this week showed that the economy had shrunk by 1.2 percent in the first quarter year-on year in a tentative sign of stabilisation. The latest figures exceeded the expectations of Economy Minister Alexei Ulyukayev, who had predicted a decline of 1.4 percent for the same period.
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