The World Bank said in its latest forecast Wednesday that the Russian economy is expected to grow by 1.6% in 2020 and by 1.8% in 2021, slightly less than the multilateral development bank previously expected, The Moscow Times reports.
The report puts the growth of Russia’s GDP this year at 0.1 percentage points lower from its previous outlook but kept its 2021 forecast intact.
Russia’s growth is expected to receive support from stable oil production and the government’s $400 billion national investment program fueled by last year’s value-added tax (VAT) hike, the World Bank said.
“Nevertheless, private investment remains tepid in the projection, due to policy uncertainty and slowing potential growth over the longer term as demographic pressures increase, and as structural problems, such as the lack of competition, accumulate,” the report said.
The bank estimated Russia’s economy slowed down to 1.2% in 2019 over “softer-than-expected investment and trade, together with a continuation of international economic sanctions.”
Other contributing factors include softer industrial activity, OPEC oil production cuts and pipeline-related disruptions, as well as substantially weaker retail sales volumes after the VAT hike and low consumer confidence. Russia is one of eight countries that still drove much of the emerging market improvement, the World Bank said.
Argentina and Iran are expected to emerge from recessions in 2020, and prospects are expected to improve for five countries other than Russia that struggled with slowdowns in 2019: Brazil, India, Mexico, Saudi Arabia, and Turkey.
Globally, the World Bank shaved 0.2 percentage points off of its growth forecasts for an outlook of 2.4% growth in 2019 and 2.5% in 2020. It attributed the global slowdown to a slower-than-expected recovery in trade and investment despite cooler U.S.-Russia tensions.
2019 marked the weakest economic expansion since the global financial crisis a decade ago, the bank said. 2020, while a slight improvement, remains vulnerable to uncertainties over trade and geopolitical tensions.