RS Brief news We need growth like in China...

We need growth like in China...

September 2012

The European Bank for Reconstruction and Development (EBRD) has released its forecast for the Russian economy, and the prospects are disappointing. The authors of the EBRD report entitled “Regional Economic Prospects” dramatically lowered projections for economic growth in Russia in 2012-13. Russia's GDP growth forecast for 2012 has been reduced from the previously-expected 4.2% to 3.1%, and the forecast for 2013 has been lowered from 4.3% to 3.3%.

According to EBRD experts, “the reduced price of oil, added to the pre- and post-election uncertainty has led to a significant drop of around 25% in the Russian stock market in Q2, and the rouble has depreciated against the US dollar by more than 10%”.

In the second half of 2012, experts believe, the growth of the Russian GDP will be adversely affected by expected low volumes of agricultural crops and accelerating inflation. By June inflation had already risen to 4.3%, threatening to exceed the figure of 6% forecast by the Central Bank of Russia by December 2012.

Note that on 20 July 2012 the Minister for Economic Development Andrey Belousov told reporters that his department can increase the forecast for GDP growth in 2012 to 3.8-4%. According to the Ministry's official forecast the GDP growth in Russia for 2012 is set to amount to 3.4%. In the first half of 2012 that figure was around 4.4%. Please also note that in late April 2012 Prime Minister Dmitry Medvedev expressed his intention to increase the rate of economic growth, saying: “The rate of GDP growth is 4%, which is not bad for the US. We need growth of 6 or 7%, like in China and India”. RS