Serj Panchuk
An international rating agency named Fitch has downgraded the economic forecast for the Russian Federation. In particular, the experts working for the international agency assume that the Russian economy will grow by 1,8% this year. The previous forecast used to be 2% in 2018. The economic forecast for the next year has dropped from 2% down to 1,9%. In 2020, the Russian economy is believed to gain only 1,5%. The long term forecast is also bearish – 1,2% a year on average.
The thing is that the first quarter of the year turned out to be rather moderate in terms of GDP growth, which let the experts expect a weaker GDP increase this year. According to the preliminary figures provided by Rosstat, the Russian GDP increased by 1,3% in Q1 2018.
The experts believe that the growth is hindered by a cautious budget policy and massive foreign currency purchases by the Russian Ministry of Finance. They are going to spend around 20% of the federal budget on currency market interventions.
For now, the biggest economic driver is still the internal consumption driven by the Russian population. At the same time, investing in Russian businesses is expected to keep slowing down because of a lack of big-scale infrastructural projects. At the same time, the anti-Russian sanctions introduced by the US-led Western world are also believed to contribute a lot to the investment slowdown. However, the experts don’t deny the opposite scenario where the Russian economic growth starts accelerating, mainly thanks to the execution of President Putin’s latest decree signed in May 2018.
Serj Panchuk
