|UPDATE: World Bank Revises Its Growth Projections for Russia for 2015 and 2016 (June 1, 2015)|
MOSCOW, April 1, 2015 — The World Bank projects a negative growth outlook for Russia in 2015-2016, with the economy expected to contract by 3.8 percent in 2015 and modestly decline by 0.3 percent in 2016. Investment is projected to contract for a second year in a row as the Russian government is delaying some large infrastructure projects and private investors are cutting back on investment programs, while capital remains expensive and demand uncertain, according to the World Bank’s latest Russia Economic Report, launched today in Moscow.
The report notes that the weak investment demand resulting from deep structural problems in the Russian economy was an important cause of the slowing Russian growth in 2014, and this was compounded by the terms of trade shock, geopolitical uncertainties, and the economic sanctions later in the year.
And yet, despite the confluence of adverse factors that hit the economy in 2014, Russia has so far avoided recession. “The impact of the main shock, the slump in oil prices, only began to affect the economy in the final quarter of last year, and the impact is likely to be more profound in 2015 and 2016,” said Birgit Hansl, World Bank Lead Economist for the Russian Federation and the main author of the Report. “Moreover, the Russian government and Central Bank were able to respond swiftly with policy responses that successfully stabilized the economy.”