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IMF Finds Russian Economy Recessive
May 1, 2014 22:30


International Monetary Fund (IMF) believes the Russian economy is recessive, as it shows a decrease the second quarter in a row.

The fund changed the forecast for Russian economic growth in the current year and in 2015 down to 0.2% and 1% respectively. The same IMF forecast in April, 2014 was 1.3% for 2014 and 2.3% for 2015. This was told by Councilor of the European Department of IMF Antonio Spilimbergo at the press conference.

In addition, the IMF predicts that the Russian federal budget surplus for the current year will be at the level of 0.34% of GDP. IMF also welcomes the decision of the Russian Central Bank to raise key interest rate up to 7.5%, but doubts the sufficiency of this measure. Spilimbergo said about the need of tightening monetary policy as a further measure to reduce inflation. The Fund expects in Russia more than 6% inflation in 2014.

Capital outflow in the current year is forecasted at $100 billion. Spilimbergo believes that this year investments will also continue dropping.

According to the IMF representative, the geopolitical environment in Russia affects the size of banks' profits. "The system is experiencing pressure associated with uncertainty due to geopolitical environment as well. In addition, growth deceleration  happens there and this will affect both, profitability and quality of the banks," Spilimbergo said.

Author: Anna Dorozhkina

Tags: International Monetary Fund Russian Economy    

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