The Russian economy is to expect GDP growth in 2017 as long as oil prices remain above a $45 a barrel.
The Federal Statistics Service shows that the Russian economy has contracted at a slower pace than previously predicted. It contracted 3.8% in Q4 in 2015, and some analysts have predicted a 3.9% contraction. Overall, for 2015 Russia had 3.7% GDP growth.
Another report from the Economic Development Ministry says that as long as the oil prices remain above $45 a barrel, the Russian economy will be able to record a GDP growth in 2016 and once again in 2017. Currently, the oil prices pivot slightly above $40, but according to some analysts the price may become $60 per barrel by 2018.
The GDP growth was revised by ministry as well. According to it, the 2016 GDP growth rate went from 0.3 to 0.8 per cent.
This data back the decision from March 18 made by the Russian Central Banks saying that they’ll hold the interest rates steady at 11 per cent on studies which showed a lower ruble enabled greater export of local manufactured goods and commodities. The bank expects the current 7.9 per cent inflation to go down to 4 per cent by the end of 2018.
Last week, Russia was one of 23 Emerging Markets which experienced a rally in the currency and stock changes.
Despite the fact that Moscow’s benchmark MICEX has performed better since the beginning of the year, at the end of last week, it was still trading lower than its monthly peak on March 18.
Russia’s ruble currency jumped 0.7 per cent against the dollar on Wednesday, before slipping back down and then rising 1.18 per cent on April 1.
Russian economists have warned that the country would have problems if oil prices were maintained below $30 a barrel since Russia’s economy is heavily dependent on oil and gas. However, the risk was considerable as for a while in February oil prices fell to $26 per barrel.