Country Economic Forecasts > Russia

We have been anticipating a two-year recession in Russia for some time now, and last month we lowered our forecast to reflect a deepening recession because of the further slide in oil prices. Indeed, with the supply glut in oil markets extending into 2016, we expect oil prices to remain below US$35pb on average this year, rising slightly to US$40pb in 2017. Preliminary estimates show that the economy contracted by 3.7% in 2015, slightly better than our -3.8% estimate, and we forecast GDP will shrink by another 2.4% in 2016 before the start of a gradual recovery in 2017 (0.8%).The sustained period of very low oil prices will also continue to undermine the rouble, whose renewed volatility since the start of the year will likely delay any easing of policy by the Central Bank of Russia until the middle of the year. And an additional drag on growth will come from tighter fiscal policy, as the government cuts spending in response to lower-than-expected oil revenues.