BRUSSELS, May 6. /TASS/. The European Commission expects Russia's GDP to decline 5% in 2020 due to the consequences of the coronavirus pandemic, which is more than double the 2.3 % decline in 2015 caused by falling oil prices and Western sanctions. This assessment is contained in the European Commission's spring economic forecast published on Wednesday. In this outlook the EC revised its previous expectations for all countries downwards.
The EC expects Russia's economic growth to resume as early as 2021, at 1.5%, despite expectations that oil prices will remain low.
These figures are approximately in line with global trends - the European Commission expects the global GDP to fall by about 3% this year, with the economies of the EU (7.4%) and the United States (6.5%) suffering the most losses.
The European Commission notes that the situation in Russia was mitigated by large state investments in national, mainly infrastructure projects, which stimulate growth and economic activity.
"The economic activity slowed down to 1.3% in 2019, as investments and external demand were sluggish. Still, public investments into national projects, a major programme of mostly infrastructure spending to stimulate potential growth, accelerated towards the end of 2019 resulting in a gradual pick up of economic activity," the EC notes.
The real GDP in Russia fell due to the collapse of oil prices to "18-year lows" amidst "a 25% plunge in global oil demand" and deterioration of demand due to the pandemic.
"The lockdown measures were originally less severe than in other countries, but were sharpened with accelerating infections in April. These measures have a significant negative effect on consumption that is expected to decline sharply, as most outside activity is curtailed," according to the document.
"However, fiscal measures are likely to cushion part of the slump as automatic stabilizers start to work and social spending is expected to rise. At the same time, corporate and household incomes are set to dwindle," the EC says.
The European Commission believes that "private investment is set to be subdued in 2020, as the situation of SMEs is deteriorating rapidly and the energy sector is unlikely to spend in the current circumstances."
The EC also predicts a decline in exports and imports, which will begin to recover only in 2021.
As for oil prices, the European Commission expects them to remain low in at $38.4 per barrel in 2020 and at $40.2 per barrel in 2021.
In February 2020, in its winter forecast, the European Commission assumed that the coronavirus epidemic will have a limited impact on the global economy, and its consequences will be overcome in the first quarter of 2020. Since the start of the pandemic, more than 3.6 mln people have been infected with coronavirus in the world, over 250,000 have died.