Russia’s GDP Could Decline by 1.3% This Year, U.S. Institute Predicts

The Russian economy may decline by 1.3% in 2020, the Institute of International Finance (IIF) in Washington, D.C. has said in a report, according to Izvestia

The predicted economic downturn in Russia will not be as substantial as in the United States, the EU, and most developing countries, where the plunge is expected to reach 4.7%, the IIF said. 

The fluctuating ruble exchange rate, the stability of the banking sector and a sizeable amount of resources will help Russia weather the crisis, the Institute’s experts believe. However, they do not rule out that the crisis caused by the coronavirus pandemic will worsen.

Russia’s economy will not be able to avoid a recession and a slowdown, the paper quotes Chief Analyst at BCS Premier Anton Pokatovich as saying. 

“The driver of GDP growth, that is, consumer demand will be under tremendous pressure since quarantine measures and a decrease in production can push down Russians’ real disposable incomes by 2-4%. If that is the case, the country’s GDP will drop 2.8% by the end of the year,” he noted.

Theoretically, the Russian economy can reach positive growth rates by the end of this year, because the government has all the necessary tools and reserves, according to Vadim Ponkratov, Director of the Financial Policy Center at the Russian government’s Financial University. 

He said it is now essential to focus on the situational measures, which will require minimum costs and will be the most effective. 

“Once the pandemic situation clears up, more systemic anti-crisis levers can be used. Much will depend on the pace of an economic recovery in developed countries and China. The faster they recover, the sooner Russia will overcome the crisis,” he concluded.