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Russian economy to sink into recession at $60 oil price — finance minister

November 18, 2014, 16:14 UTC+3 MOSCOW
Anton Siluanov believes that recession in Russia is inevitable, if the situation worsens
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© Victor Drachev/TASS

MOSCOW, November 18. /TASS/. The Russian economy will sink into recession, if world oil prices fall to $60 per barrel, Bloomberg news agency reported on Tuesday, citing Finance Minister Anton Siluanov.

Recession in Russia is inevitable, if the situation worsens, the finance minister said.

“If the oil price declines to $60 per barrel, the economy will have negative growth,” he told Bloomberg.

The Russian government will have to make a more strict approach to the budget and actively use crisis-fighting tools, Siluanov said.

“We’ll have to adjust our budget strategy and review priorities. All social obligations will be met, nobody plans to revise them, but second-tier priorities will be postponed.”

The drop in oil prices and the economic contraction won’t be as serious as it was for Russia in 2008-2009, Siluanov said.

“Growth will recover after the economy adapts to new conditions.”

A decline in world oil prices to $70 per barrel or perhaps to $60 per barrel won’t be a long-term trend, Siluanov said. “Most likely, the price will be within range from $80 per barrel to $90 per barrel next year.”

Russia’s Central Bank lowered on November 10 its forecast on the country’s GDP growth in 2014 to 0.3%

The regulator explained its forecast downgrade by “the cumulative impact of external and structural factors,” which caused a slowdown in the growth rates of the Russian economy.”

“Instead of the GDP growth acceleration expected earlier [from 1.3% in 2013 to 2.0% in 2014], the Bank of Russia now projects its slowdown to 0.3% in 2014,” according to the specified monetary policy guidelines.

The regulator’s previous monetary policy guidelines projected the country’s GDP growth at 0.4% in 2014.

Russia’s Economic Development Ministry expects GDP to grow by 0.5% in 2014 and by 1.2% in 2015.

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