(Source: http://www.peoplesmoney.ru/node/57)

 On Tuesday, experts from the World Bank revised Russian GDP growth forecast from 1.1 to 0.5% and increased inflation expectations for the year down to 8% (the latest forecast of the Central Bank is 7.5%). In the future, the projected growth of the economy in line with the baseline scenario of the international credit organizations will be even lower: 0.3% in 2015 and 0.4% in 2016.

The economy is on the eve of the recession, World Bank economists wrote in their report. According to experts, the main reason for the decline in economic growth has been a sharp decline in investment demand and consumption growth. The increased tensions between Russia and Ukraine and related sanctions directly affect investment and consumption decisions, experts believe.

Besides that, the consumption was influenced by such factors as the ruble devaluation and the increase in inflationary pressures. In the future, the expansion of sanctions will lead to even more significant reduction in domestic demand, which now still remains the main driving force of the economy, experts acknowledge in their report on the state of the Russian economy.

On the other hand, as a result of changes in the geopolitical situation, still incomplete review of mid-term objectives of economic policy prevents the further growth of the economy, experts warn. Experts see the recipe for the revival of the Russian economy all the same: predictable economic conditions and new development model based on diversification. Earlier, Bank of America, Merrill Lynch and HSBC downgraded forecasts for growth of the Russian economy. "If we expect that sanctions will be expanding, we will not be limited to those levels, of which the World Bank says. The effect of the food sanctions imposed by the Central Bank is estimated at 1.5%, expecting that it will be distributed proportionally this and next years. If the effect will come this year, inflation could exceed 8% of those of which the World Bank said, and if sanctions are expanded, the positive economic growth may become for us quite an optimistic scenario," Sberank’s chief economist Yulia Tseplyaeva said.

According to the World Bank experts, measures to stabilize the macroeconomic situation, adopted by Russia in response to geopolitical changes were "timely and successful", but some of the other predictions of the authorities are not so good. In particular, according to experts, the Russian government overestimates the ability to increase productivity: there is a significant growth potential in the food industry, where the productive capacity is used by 60%. Increasing productivity in other sectors requires substantial investment.