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Russian economy in lingering recession, hoping for recovery

December 31, 2015, 15:13 UTC+3
Oil prices continue to be one of critical risks for the Russian economy in 2016
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© Ilya Pitalev/TASS

MOSCOW, December 31. /By TASS reporter writer Maria Bobareva/. Expectations of Russian authorities regarding the long recession of the Russian economy in 2015 proved to be largely justified. Formal outlooks of the Russian Ministry of Economic Development revised the drop in the economy from 0.8% to 2.8%, while the most recent decline forecast is 3.7-3.8%. Stabilization surfaced in the economy in summer but was later undermined by volatile oil prices and plummeted by the year-end. At the same time, authorities and analysts believe the situation could be worse but the economy managed to adapt to low raw materials prices and sanctions environment.

Consumer demand and investments, these main drivers of the economy, did not show anything promising. The consumer sector is the greatest point of concern for the government, Minister of Economic Development Alexey Ulyukayev said. Investments declined by 5.5% in January - November 2015, in contrast to earlier expected 10%, he said. Investments of the fuel and energy sector contributed to improvement of this indicator, the minister said. Consumer demand fell because of the real salary contraction, the price hike and the consequent transition to the selective and saving model of ongoing consumption, the Economic Development Ministry said in its November bulletin. The retail trade turnover dropped 13.1% year-on-year in November 2015.

Oil prices continue to be one of critical risks for the Russian economy in 2016. Russian Finance Minister Anton Siluanov gave a pessimistic assessment for the oil price. It will be $40 a barrel in 2016, the minister said. Financial authorities are ready to revise the budget already in the first quarter of the next year if such a scenario is implemented.

The government expects a minor recovery in the Russian economy in 2016. The Ministry of Economic Development expects growth to be 0.7% in its latest outlook. However, Minister of Economic Development Alexey Ulyukayev said later that grounds exist for the downward revision of the forecast due to low oil prices. Current expectations of the ministry provide for inflation at the level of 6.4%, the average annual dollar rate of 63.3 rubles and the oil price of $50 a barrel.

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