Country Economic Forecasts > Russia

Parliamentary elections on 18 September saw a resounding victory for President Putin's ruling United Russia party, although the breakdown suggests weak turnout and voter apathy in the major urban centres. The authorities have interpreted the results as vindication of their policies. To that effect, foreign policy will remain confrontational, diminishing the chances that sanctions will be removed in 2017. And while a more credible macroeconomic framework has reduced the depth of this year's recession to just -0.8%, we are sceptical about the political willingness to institute economic reforms to boost the economy's potential. Indeed, we continue to expect a very slow recovery, with growth seen at just 1.2% in 2017.Higher oil prices may help the RUB and the economy, especially following OPEC's tentative agreement to cap oil production. And the CBR has resumed its rate cuts after a three-month hiatus on the back of falling inflation and inflation expectations, although it also sent clear signals of its intent to fight inflation, suggesting no further rate cuts this year. We have adjusted our baseline accordingly, and now expect the main policy rate to stay at 10% to end-2016.