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Central Bank head says development of economic situation in Russia meets expectations

December 16, 2016, 19:00 UTC+3
The Central Bank expects inflation in Russia to be at 5.4-5.8% by the end of 2016
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MOSCOW, December 16. /TASS/. The development of the economic situation in Russia mainly meets the expectations of the Central Bank, head of the Central Bank Elvira Nabiullina told a press conference.

"In general, the development of the economic situation meets our expectations. Inflation is slowing in line with the forecast, economy is beginning to enter the recovery stage, inflationary risks related to the fiscal policy have declined," she said.

On inflation

The Central Bank expects inflation in Russia to be at 5.4-5.8% by the end of 2016.

"According to our estimates made on December 12, the annual rate of consumer price inflation fell to 5.6% from the beginning of the year. The inflation accumulated since the beginning of the year in the end of November amounted to 5%. That is a historical minimum registered for the whole in history of observation. At the end of the year we expect inflation to be 5.4 -5.8%," she said.

The Russian Central Bank does not see any signs of a seasonal acceleration of inflation at the end of this year. "We will not necessarily see the effect of increasing inflation by the end of the year. In the past week we has inflation of 0.1%," Nabiullina said.

She added that before the end of the year the regulator won’t be able to influence inflation using measures of monetary policy because these measures won’t have an immediate effect.

"We are making impact on inflation and inflation expectations in the middle of the next year," she said.

Earlier today, the Central Bank reported that annual inflation in Russia continues to decline and as of December 12, 2016, reached 5.6% against 6.1% in October 2016.

On capital outflow

The outflow of capital from Russia will be about $17 bln in 2016, head of the Bank of Russia said.

"The outflow of capital from Russia, according to our estimates, will be less than $20 bln, but it can be around $17 bln," she said.

Nabiullina added that the total amount of revenues from privatization of Rosneft won’t be reflected in the balance for this year.

According to the regulator, net capital outflow from Russia decreased 3.3-fold in January-November of this year to $16.1 bln. In January-November period of 2015, net capital outflow from the country amounted to $54.1 bln.

In its turn, the Economic Development Ministry forecast capital outflow from Russia at $14-18 bln and its increase to $25 bln by 2019.

On GDP growth

The growth rate of the Russian economy might be higher than 1.5-2% per year with implementation of structural reforms in the country, Nabiullina said.

"In 2017, the rate of GDP growth will come to the positive region with implementation of the baseline scenario. In the next two years, economic growth will accelerate to 1.5-2%. The rate might be higher if of the structural reforms are implemented," she said.

On volatility of ruble

Volatility of the ruble rate will be decreasing in conditions of economy diversification, Nabiullina said.

At the same time, she said, the national currency has already become less volatile than oil prices.

"Now we see that the exchange rate has become less volatile than oil, while earlier it followed it almost as one and the same. This volatility, in our opinion, will decline in case of diversification of the economy, which is so necessary," Nabiullina said.

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