|
 In a much more pessimistic outlook than the Russian government's,
the Washington-based lender forecast the economy would grow by just
0.3 percent next year and could contract if the Ukraine crisis
escalates.
In 2016 Russian gross domestic product will increase by 0.4 percent,
it said. The government estimates growth of 1.2 percent in 2015 and
2 percent in 2016.
"We don't believe that investment growth is picking up as much as
the government believes," Birgit Hansl, the World Bank's economist
for Russia, told journalists.
"Their assumption is that monopolies will be investing ... We expect
less strong investment impulse," she said.
Sanctions imposed by the United States and Europe over Russia's
involvement in Ukraine will dampen investment, while consumption
growth in coming years - a major driver behind Russia's economy -
will be subdued.
"More restricted access for Russian companies and banks to external
financing (due to sanctions) is likely to have already affected
investment decisions, leading to a delay or a scaling back of
investment programs," the World Bank said in its bi-annual report on
Russia.
"We expect that this trend will worsen during the second half 2014
and throughout 2015, when the impact of the additional sanctions
will be felt and may lead to a period of near stagnation."
Consumption growth will likely slow to 0.5 percent in 2015 from
about 2 percent this year, the bank forecasts.
It expects the economy to grow 0.5 percent this year, in line with
the government's forecast, after predicting in March after Russia's
annexation of Ukraine's Crimea region, that Russia was at risk of
sliding into recession.
"The good news is that Russia did escape recession," Hansl said.
RISKY FISCAL STANCE
The Bank's forecasts assume no new sanctions either on or by Russia
over the Ukraine crisis. The Bank warned that if the conflict around
Ukraine escalates, the economy may contract by 0.9 percent in 2015.
Policy uncertainty and a continuing lack of structural reforms
remain the "deciding" factors for the outlook, it said.
[to top of second column] |
"Structural reforms would need to focus on improving economic
institutions to ensure that public finances are stable and economic
volatility well-managed," the Bank said.
"Stabilization, education, and competition should be the reform
priorities for the next decade."
The bank commended the central bank for its perseverance in shifting
policy to focus on inflation targeting as of next year and away from
controlling the rouble, but it said the central bank is in a tough
position.
"It might become challenging to operate in an environment that has
now both high inflation and low growth risks," the bank said in the
report.
It forecasts inflation of 8 percent this year, above the central
bank's forecast of 7.5 percent.
The Bank also warned that Russia's recent decision, penciled in the
budget, to allow taking funds from the two oil windfall funds - the
National Wealth Fund and the Reserve Fund - next year if the
government needs to support the economy is risky.
"Russia's fiscal position is becoming even more tightly linked to
oil revenues and global oil prices," the Bank said.
Russia's non-oil deficit is likely to remain persistently high at
above 10 percent of GDP, it warned.
"Use of these (the Reserve Fund and the National Wealth Fund) should
be prudent," Hansl said.
(Editing by Jason Bush and Susan Fenton)
[© 2014 Thomson Reuters. All rights
reserved.] Copyright
2014 Reuters. All rights reserved. This material may not be
published, broadcast, rewritten or redistributed.
 |
