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OECD Lowered Forecast for the Russian Economy
Written by: PaxForex analytics dept - Friday, 27 June 2014 0 comments
The Organization for Economic Cooperation and Development (OECD) lowered its forecast for growth in the Russian economy in 2013 up to 2.3% compared with expected 3.8%. Russia's GDP growth forecast for 2014 was lowered from 4.1% to 3.6%, according to the OECD report on the global economic forecast.
The rate of growth of the Russian economy has declined in the second half of 2012 and an unfavorable situation remained with the disappointing performance of industrial production, investment, exports and retail trade, says the OECD. Although the economic slowdown was caused mainly by external factors, their impact was reinforced by high dependence of Russia on commodity exports.
Inflation in Russia is likely to have peaked in February of this year (7.3% in annual terms) and now will gradually slow down, approaching the Russian Central Bank target range of 5 - 6%. According to the forecast of the OECD, the average inflation in Russia this year will be up to 6.6% and it will fall to 5.4% in the next year.
The main risk for the Russian economy remains a strong drop in world oil prices, given the dependence of the economy and the budget from oil exports. In addition, the acceleration of capital outflows, associated with a possible
increased uncertainty in the global financial markets, may adversely affect the investment prospects of Russia.
Earlier, the Deputy Economic Development Minister Andrei Klepach reported that GDP growth in Russia in January - April 2013 was 1.8%. In April, the annualized rate rose by 2.6%.
Meanwhile, the European Bank for Reconstruction and Development (EBRD) said earlier that expects Russia's GDP growth this year at 1.8%. According to the organization, what seemed a temporary weakening of the Russian economy, now looks like a trend. The reason for this trend, according to the Bank, is a decrease in commodity prices.
Earlier, the International Monetary Fund (IMF) lowered its growth forecast for the Russian economy. In April edition of the IMF report "World Economic Outlook” Russia's GDP in 2013 will grow by 3.4% instead of 3.7% as previously predicted.
According to the forecast of the Ministry of Economic Development of the Russian Federation, country's economic growth will be up to 2.4% in this year.
GDP comparison 2013 - Russia and some other countries