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Russia had recorded a weak economic growth of 1.3 percent in 2019. However, the economy was expected to recover in the second half of 2019, while the growth forecasts were upwardly revised for 2020 as the government moved closer to implementing its delayed national infrastructure projects. However, all this was within a positive oil price environment. With the Brent price now expected to trade in the range of USD 20-30/bbl in the months ahead, and with the export outlook equally hampered, the Russian economy is expected to record a negative quarter-on-quarter change in GDP in the second and third quarter, said Commerzbank in a research report.
“We reduce our full-year 2020 forecast from 1.4 percent to -2.0 percent and forecast only a mild recovery in 2021”, stated Commerzbank.
The real GDP data do not directly show changes in oil price, therefore, GDP will not decline simply due to the value of oil sales will fall. However, consumption, investment and other GDP components will suffer the negative multiplier-effects of reduced value of oil sales, and manufactured goods exports will shrink sharply over the next quarter, said Commerzbank.
“It is worth mentioning that our own growth forecast is less negative for 2020 than the consensus holds. This is not really an optimistic outlook: our profile is simply less volatile, with less contraction this year and less rebound next year; the level of GDP reaches around the same level in two years' time”, added Commerzbank.