MED Published Revised Forecast for 2014-2016

RUSSIA ENERGY / FINANCE - In Brief 25 Sep 2013 by Marcel Salikhov
Ministry for Economic Development (MED) published full details of its medium-term economic forecast for 2014-2016. Main parameters of the forecast were announced several weeks ago but only yesterday full updated version became public. MED expects that Russian economy will grow 1.8% in 2013 but will accelerate to 3.0% in 2014. Main sources of growth will come from investment activity supported by lower CBR ‘s interest rates and public infrastructure investments. MED expects that investment projects financed by National Welfare Fund will start next year and will support investment growth.The World Bank published today its own version of Russian macroeconomic forecast which corresponds almost exactly to MED in baseline figures. WB expects Russian GDP to grow 1.8% this year and 3.1% in 2014. WB sees increased investments as source of future growth. We think 3% growth seems to be rather optimistic and there are more downside risk than upside ones . Immediate risk for 2014 growth will come from freezing regulated tariffs. It will be direct hit for investments of monopolies while increased investments from other industries is far from certain at least in the short run. CBR recent decisions show that it will decrease only to match lower inflation rates and nothing more. It will not give large scale boost for the economy.

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