Russia's economy ministry said on Saturday it expected gross domestic product to fall 3 percent this year, more optimistic than many analysts' forecasts of a 4-5 percent drop. The economy has been hit by a sharp fall in oil prices and by sanctions imposed on Moscow for its role in the Ukraine crisis, leaving Russia facing its first year of recession since 2009 in the wake of the global financial crisis.
The new growth prediction was contained in macroeconomic forecasts used by the government for budgetary planning. The economy ministry last revised these in December, when it expected that gross domestic product would fall by 0.8 percent this year with average oil price of $80 per barrel. In its new forecasts, it now assumes an average oil price of$50 per barrel this year, similar to its current levels. Oil and gas account for about two-thirds of Russia's exports and half of federal budget revenues, making the oil price a key variable.
Economy Minister Alexei Ulyukayev told Russian news agencies that the oil price forecast was "as conservative as possible", compared with more upbeat consensus forecasts, Interfax reported. Under the new forecasts, inflation would not ease this year and would be at 12 percent by the end of 2015, compared to 11.4 in 2014. Capital investment was likely to fall by 13 percent this year and retail sales by 8 percent, Ulyukayev said. Net capital outflows, spurred by a falling rouble and increased tension between Moscow and the West over Ukraine, are projected to reach $115 billion.