Bloomberg News

IMF Raises Russian Growth Forecast to 4% on Higher Crude Prices

April 17, 2012

Russia’s economy will expand 4 percent this year, faster than earlier estimated, as the world’s biggest energy exporter benefits from higher prices for commodities, the International Monetary Fund said.

The forecast for 2013 was revised down to 3.9 percent because oil prices will probably retreat, the Washington-based lender said today in its World Economic Outlook. The 2012 prediction was upgraded from a 3.3 percent projection in January and was almost in line with the IMF’s projection of 4.1 percent for this year made in September.

Slower investment following a surge last year may cut expansion to 3.4 percent in 2012, from an earlier forecast 3.7 percent, the Economy Ministry said this month. Average prices for Urals crude will be $115 a barrel this year, more than earlier estimated, the ministry said. While higher crude prices are currently buffering Russia’s economy, it remains exposed to deteriorating conditions in export markets, the IMF said.

“Weaker exports to Europe along with policy tightening in some economies will moderate growth in the Commonwealth of Independent States this year, even though commodity prices are expected to remain high,” the IMF said. “If the euro area crisis intensifies, the fall in global demand together with the associated decline in commodity prices will be a significant constraint on the region’s growth.”

Growth in the CIS, a grouping of former Soviet republics, is forecast to slow to 4.25 percent in 2012, from 5 percent last year, according to the IMF. A possible escalation of the European debt crisis also poses risks to Russia’s financial industry, it said.

“Distress in a systemically important euro area bank could cause an abrupt withdrawal of funding and raise the likelihood of banking sector distress in Russia,” the IMF said.

To contact the reporter on this story: Scott Rose in Moscow at rrose10@bloomberg.net

To contact the editor responsible for this story: Balazs Penz at bpenz@bloomberg.net


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