IMF sees Russia's GDP decline at 1.8% in 2016

By bne IntelliNews April 12, 2016

In its latest World Economic Outlook entitled "Too slow for too long", the International Monetary Fund (IMF) revises Russia's GDP recession in 2016 to 1.8%, down by 0.8pp compared with January's outlook and 1.2pp compared with its October 2015 report, with recovery to 0.8% GDP growth expected in 2017.

"We have revised the GDP for 2016 in Russia down relative to January because we have seen during 2015 a delay in economy turning the corner, with the second half of 2015 being weaker than expected and hence entering 2016 on a weaker footing," a panel of IMF officials told at a live press conference on April 12.

At the same time, they added that "clearly market conditions for Russia have improved, helped by the overall decline in global risk aversion, by the fact that the oil prices have rebounded, and by the fact that Russia made use of exchange rate flexibility as an adjustment tool".

The IMF envisages a return to growth in 2017, anticipating the economy to turn the corner at some point in the current year.

While the picture for emerging markets is quite diverse, severe economic conditions remain in Brazil, Russia, and a number of other commodity exporters, the IMF wrote in its World Economic Outlook published on April 12.

Russia, Brazil, and a small group of other commodity-exporting countries facing macroeconomic difficulties, experienced dramatic contractions in investment during 2015 of close to 20% coupled with declines in imports.

These developments, in addition to the weakness in commodity-related investment, reflect the significant exchange rate depreciation in many of these countries and the impact of sanctions in Russia, the IMF believes.

The international sanctions on Russia compound the effects of lower oil prices and structural weaknesses, following a GDP contraction of 3.7% in 2015.

The Fund sees geopolitical risks as staying elevated in 2016, with the situation in Russia and Ukraine remaining difficult and strife continuing in some countries in the Middle East.

The IMF is less optimistic on inflation than the Central Bank of Russia, expecting inflation to decline from 15.5% in 2015 to 8.4% in 2016, while the regulator sees the inflation rate at 6-7% for 2016 overall.

In its policy recommendation, the IMF believes that in response to the oil price collapse policymakers in Russia will need to implement an "ambitious medium-term fiscal consolidation, anchored in a rules-based framework".

In addition, boosting potential growth will require stronger governance and protection of property rights, lower administrative barriers and regulation, and greater competition and efficiency in capital allocation.

Recession in Russia and spillovers from it, as well as the effect of lower oil prices on oil-exporting countries, all maintain a very weak economic outlook for the Commonwealth of Independent States (CIS), the IMF notes.

Output in the CIS region is projected to decline further by 1.1% in 2016, with recovery expected in in 2017 at 1.3% GDP growth.

Ukraine's economy is projected to return to positive growth in 2016, supported by improving consumer and investor confidence, gradually rising real incomes, and a gradual easing of credit conditions.

In 2016, Ukraine's GDP is expected to bounce to 1.5% growth from 9.9% drop seen in 2015, and to expand by 2.5% in 2017.

Meanwhile, GDP in neighbouring Belarus is expected to contract by 2.7% in 2016 after 3.9% decline in 2015, to recover to slight 0.4% growth in 2017.

Related Articles

Poland’s PGNiG threatens legal action over EU deals with Gazprom

Polish state-controlled gas utility PGNiG claimed on October 26 that it is ready to sue the European Commission and Germany's energy regulator for their soft approach to Russian gas giant Gazprom ... more

Ukraine, Russia agree to deploy armed OSCE mission in Donbas

The leaders of Ukraine, Russia, Germany and France agreed to deploy an armed police mission of the Organisation for Security and Cooperation in Europe (OSCE) in the war–torn Donbas region to secure ... more

Czech police arrest Russian accused of US hacking

Czech police announced on October 19 that they have arrested a Russian citizen suspected of involvement in hacking US targets. The arrest was made at a Prague hotel in conjunction with the FBI. A ... more

Register here to continue reading this article and 2 more for free or 12 months full access inc. Magazine and Weekly Newspaper for just $119/year.

If you have already registered, enter the information below with the same email you used previously and you will be granted immediate access.

IntelliNews Pro subscribers click here

Thank you. Please complete your registration by confirming your email address. A confirmation email has been sent to the email address you provided.

Thank you for purchasing a bne IntelliNews subscription. We look forward to serving you as one of our paid subscribers. An email confirmation will be sent to the email address you have provided.

To continue viewing our content you need to complete the registration process.

Please look for an email that was sent to with the subject line "Confirmation bne IntelliNews access". This email will have instructions on how to complete registration process. Please check in your "Junk" folder in case this communication was misdirected in your email system.

If you have any questions please contact us at

Subscribe to bne IntelliNews website and magazine

Subscribe to bne IntelliNews website and monthly magazine, the leading source of business, economic and financial news and commentary in emerging markets.

Your subscription includes:
  • Full access to the bne content daily news and features on the website
  • Newsletters direct to your mailbox
  • Print and digital subscription to the monthly bne magazine
  • Digital subscription to the weekly bne newspaper

IntelliNews Pro subscribers click here

bne IntelliNews
$119 per year

All prices are in US dollars net of applicable taxes.

If you have any questions please contact us at

Register for free to read bne IntelliNews Magazine. You'll receive a free digital subscription.

If you have already registered, enter the information below with the same email you used previously and you will be granted immediate access.

Thank you. Please complete your registration by confirming your email address. The confirmation email has been sent to the email address you provided.

IntelliNews Pro offers daily news updates delivered to your inbox and in-depth data reports.
Get the emerging markets newswire that financial professionals trust.

"No day starts for my team without IntelliNews Pro" — UBS

Thank-you for requesting an IntelliNews Pro trial. Our team will be in contact with you shortly.