Russia

Current Economic Outlook

Russia has experienced a sharp contraction in 2009 due to the fall in oil demand and revenues; the contraction in industrial output and construction; and weaker consumption. RGE forecasts a GDP contraction of 8% in 2009, followed by a sluggish recovery of around 2% in 2010. Russia’s growth contracted in double digits y/y in Q1 and Q2, contributing to a greater net output loss than during the 1998 financial crisis. Despite the doubling of crude oil prices since mid‐March and the belated rollout of fiscal and monetary stimulus, financial vulnerabilities still pose a major risk. Russia will run fiscal deficits in both 2009 and 2010, depleting its savings and returning to the debt market. Data from Q3 shows a slight improvement consistent with economic stabilization but not robust recovery. Industrial output and investment continued to deteriorate in August despite the former showing some improvement in June and July. The rise in unemployment, the shrinking middle class and a lack of credit suggest that domestic consumption, the growth driver in the boom years, will be slow to recover.

Read RGE's Full Q4 Russia Outlook.