RS Brief news IMF and Russian MED adjust their forecasts

IMF and Russian MED adjust their forecasts

June 2013

As it follows from the World Economic Outlook report released by the International Monetary Fund (the IMF) in April, the IMF lowered its growth forecast for Russia’s gross domestic product in 2013 to 3.4%. Early this year, the IMF forecasted a growth of 3.7% for the Russian economy. In addition, the Ministry of Economic Development of the Russian Federation (the MED) lowered its forecast more sharply, cutting its 2013 growth forecast for Russia’s GDP to 2.4% from 3.6%, owing to a nearly zero growth in exports. the IMF left its outlook for GDP growth in 2014 unchanged at 3.8%. In addition, growth in consumer prices in Russia is forecasted by the IMF at 6.9% and 6.2% for 2013 and 2014 respectively. Earlier, the IMF forecasted inflation at 6.0% for both 2013 and 2014.

the MED adjusted its earlier optimistic forecasts and in unison with its IMF colleagues, lowering its 2014 growth projection for Russia’s GDP to 3.7% from 4.3%, with its 2015 economic growth forecast lowered from 4.5% to 4.1%. In addition, GDP growth in 2016 is forecasted at 4.2%.

The Ministry also forecasts inflation in 2016 at 4–5%, while leaving its outlook for consumer price growth unchanged at 5–6% for 2013 and at 4–5% for 2014 and 2015.

In addition, the MED lowered its 2013 grow forecast for real household income from 3.7% to 3%. The Ministry raised its 2013 forecast for average annual ruble-USD exchange rate from 32.4 rubles to 31.4 rubles.

With regard to capital flow to Russia, the MED lowered its forecast from USD 30 billion to zero. In 2015, according to the Ministry, capital inflow is expected at USD 10 billion, instead of USD 40 billion as was forecasted earlier. For 2016, capital flow to Russia is forecasted by the Ministry at USD 20 billion.

In 2013, according to Andrey Klepach, Deputy Minister for Economic Development, Russia’s capital exports will reach USD 30–35 billion. Earlier, capital exports were forecasted by the MED at USD 0–10 billion. In late March 2013, it was reported that the MED planned to raise its 2013 forecast for Russia’s capital exports from USD 10 billion.

In addition, the Ministry lowered its 2014 growth forecast for capital investment from 7.3% to 6.6%. In addition, its projection for 2015 was lowered from 7.9% to 7.2%. Meanwhile, the Ministry forecasts a 7.6% growth in capital investment for 2016. In addition, it lowered its 2014 growth projection for industrial production to 3.4% from 3.7%, with the 2015 forecast lowered from 3.7% to 3.4%. the MED expects that industrial production will increase by 3% in 2016. According to Mr. Klepach’s optimistic forecast, industrial production is expected to grow by as low as 2% this year. RS