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World Bank predicts increase in poverty in Russia for the first time since 1998 crisis

April 01, 2015, 13:56 UTC+3
According to the World Bank report, the main risks to the medium-term forecast of Russian economic growth is continued shortage of available credit resources and low investment demand
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© EPA/MATTHEW CAVANAUGH

MOSCOW, April 1. /TASS/. The World Bank (WB) predicts growth in poverty in Russia for 2015-2016 for the first time since the 1998 crisis, according to the World Bank report published Wednesday.

Last year poverty increased significantly from 10.8% in 2013 to about 11% in 2014, the document says.

"The baseline scenario projects that the poverty rate will rise to 14.0% (20.1 million people) in 2015 and 14.1% (20.3 million) in 2016. This would be the first significant increase in the poverty rate since the 1998-1999 crises," the document said. According to the document authors, poverty did not grow even in 2008-2009 because there was some growth in disposable income.

Russian GDP forecast for 2015 downgraded from 2.9% to 3.8%

A baseline scenario also projects a contraction of 3.8% in 2015 and a modest decline of 0.3% in 2016 in Russia, the report says.

The WB downgraded its growth prospects for 2015-2016 as 2015 is likely to witness the postponed effect of oil price plunge and 2014 sanctions. "It is likely that when the full effects of the two shocks become evident in 2015, they will push the Russian economy into recession," the document says.

Earlier the WB projected a 2.9% drop in Russian GDP in 2015 and 0.1% drop in 2016.

Risks for the Russian economy

According to the World Bank report, the main risks to the medium-term forecast of Russian economic growth is continued shortage of available credit resources and low investment demand. Other noted risks mentioned by the World Bank are the expected slowdown in the global economy.

Additionally, according to the World Bank analysts, Russia's medium-term economic growth will also depend on how the country can adapt to shocks caused by changes in oil prices and sanctions, which pose a threat to financial stability and fiscal sustainability.

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