Country Economic Forecasts > Russia

A deepening contraction in the second quarter pushed the decline in Russias real GDP to 3.3% in the first half of the year, in line with our expectations that the economy will contract by 3.5% in 2015 as a whole. Consumption spending continued to fall sharply during Q2, while investment demand was hampered by persistently high credit costs amid renewed geopolitical tensions and an increasingly hostile global financial and economic environment. Moreover, the risks to the forecast have increased recently, with slumping oil prices and the possibility of a Fed rate hike pushing the rouble down to a six-month low. The chances have increased that the Central Bank of Russia may pause its easing cycle in September, which would keep lending conditions tight for households and businesses. This would delay any potential recovery in consumption and investment, and reduce the likelihood of the economy achieving our current baseline forecast of 0.8% growth in 2016.