10:11 28.05.2015

Moody's improves Russian GDP forecast for 2015-2016

2 min read
Moody's improves Russian GDP forecast for 2015-2016

Moody's has improved its forecast for Russian GDP in 2015-2016, the international rating agency said in a press release.

Moody's analysts now expect the Russian economy to contract 3% this year and remain stagnant in 2016.

It previously forecast Russian GDP to shrink 5.5% in 2015 and 3% in 2016.

Although the economic recession in Russia will be less severe than previously expected, Moody's is maintaining its forecast that low prices on oil, the weak ruble and persisting geopolitical uncertainty will continue to have a negative effect on aggregate demand over the course of the year, the report says.

"We expect that the economy will continue to shrink in the second and third quarters of 2015, as the government slows its fiscal stimulus in order to keep within its budget framework. However, a slow recovery could materialize towards the end of the year as real incomes stabilize and lending rates decline, resulting in a 3% average decline in real GDP for 2015 and zero growth for 2016," Moody's said .

Inflation might be 12% in 2015 and 8.5% in 2014. General government debt/GDP could be 17.5% and 16.8%, respectively.

Access to liquidity and the effect of the challenging domestic operating environment will have an effect on non-financial companies for several years to come.

Analogously, the exchange rate and access to state support will also play key roles in determining the quality of corporate lending in the future, it says.

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