Russia: The long road to recovery
Russia remains in a difficult economic situation as a result of low oil prices and continuing EU and US sanctions. Its economy contracted by 3.7% last year, which led to a 10% drop in gross domestic income, weakened consumer demand, discouraged investment and increased poverty levels. Discussions about a possible extension of EU sanctions are set to gather pace in June 2016. At a seminar on April 27th, World Bank Lead Economist and Program Leader Birgit Hansl presented the main findings of the semi-annual Russia Economic Report (RER) to a CEPS audience. She analysed strategic policy issues, synthesised recent trends on key economic indicators and presented the World Bank economic outlook for Russia for 2016-18.
The World Bank projects that Russia’s recovery will not materialise in the near future. The economy is expected to contract by a further 1.9% in 2016 but possibly return to positive growth next year. Ms. Hansl forecast a modest growth rate of 1.1% in 2017, but noted that there were opportunities to strengthen the competitiveness of Russia’s non-resource economy and export diversification due to the depreciation of the ruble. Any recovery will require that Russia overcome its structural constraints and address the historical challenges of its export competitiveness.