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The IMF gave a worse forecast for Russian GDP growth

October 10, 2012, 11:41 UTC+3

According to the IMF economists, Russian GDP will be growing at a slower rate that it was expected back last summer

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MOSCOW, October 10 (Itar-Tass) — The International Monetary Fund (IMF), as well as the World Bank on Tuesday, gave a worse forecast for Russian economic growth. According to the IMF economists, Russian GDP will be growing at a slower rate that it was expected back last summer. According to the IMF forecasts, the GDP growth rate will go down from four percent to 3.7% in 2012 and 3.9% to 3.8% in 2013.

In the updated report titled “Prospects for the development of world economy” the IMF gave a lower forecast of world economic growth, the Kommersant daily reported. As for Russia, its economic prospects were also revised in the direction of improvement. The IMF economists gave a worse forecast for Russian economic growth in 2012-2013 as compared with the July forecasts by 0.3% and 0.1% lower to 3.7% and 3.8%. According to the IMF, a high domestic demand should help Russia to keep afloat and not to get in a trap of the world economic recession and the dependence from the oil prices. On Tuesday, the World Bank reported that it also brings down a forecast of Russian GDP growth for 2012 from 3.8% to 3.5% and from 4.2% to 3.6% in 2013.

Meanwhile, the IMF gave a better forecast for the Russian budget situation for this and next years, the newspaper reported. According to the updated information, the surplus is expected to be 0.5% of GDP in 2012 instead of the July forecast of 0.1% and 0.2% of GDP in 2013 instead of 0.7%. It is noteworthy that the symbolic deficit of 0.1% of GDP is already envisaged in the law on the current budget for 2012. Upon the results of January-August 2012 the federal budget was executed with the surplus of 1.4%. According to the latest estimates of the Finance Ministry, the deficit will reach already 0.2% of GDP.

According to the IMF economists, Russia has a quite good situation with the state debt. This indicator in Russia is better than, for instance, in the BRICS states. So, the Russian state debt is forecast at 11% this year (in the last July forecast – 11.5% of GDP) and at the level of 9.9% (11.3%) in 2013.

The Russian market has its internal defence: the main driver of the growth is the domestic demand, which is being maintained by the state expenditures and the restoration of the credit market (by 43% annually in August), the Vedomosti daily cited Yaroslav Lisovolik from Deutsche Bank as saying.

A deep, long recession and a slow, constantly intermittent restoration are inevitable after a large-scale, systemic financial crisis, Professor of Economics from the Harvard University Kenneth Rogoff noted. There is no risk-free way to accelerate the revival, politically painful reforms are needed to improve the taxation system, make the labour market more flexible and to spur up the offer.

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