Russia’s economic growth likely to decline in 2016, recession expected to last until early 2017

Economic growth in Russia is expected to decline in 2016 and next year, before returning to growth in 2018 and the years ahead. However, the ongoing recessionary phase is expected to last until early 2017 as activity in a number of key sectors has declined over the past five months, report released by the country’s Analytical Credit Rating Agency (ACRA) showed on Monday.

Russia's GDP is expected to fall 1.5 percent in 2016 and 0.1 percent next year before returning to growth and expanding 0.5 percent in 2018 and 0.7 percent in 2019. Further, the country’s recession could last until early 2017, with growth rates likely to be restricted to less than 1.5 percent after that even in case oil prices rise, according to the forecast.

"Economic statistics for January-July 2016 show that the recession de-facto has not ended. Current seasonally adjusted growth rates of the major sectors remain negative. The mining sector, retail, construction and other basic activities have been declining over the last five months," ACRA said in its latest report.

Moreover, the agency mentioned in its oil forecast that Russia's Urals crude benchmark is expected to average at USD41 per barrel in 2016 before rising to USD43 and USD44 per barrel in the two following years. The country has been badly hit into a downturn, following declining oil prices in early 2015 and a 3.7 percent fall in gross domestic product.

Meanwhile, the Russian Economic Development Minister Alexei Ulyukayev said that the ministry has revised its 2016 growth forecast to -0.6 percent, down from -0.2 percent, while expecting growth to rebound in the subsequent quarters.