March 19, 2020 / 3:32 PM / 10 days ago

Fitch cuts Russia's 2020 GDP growth forecast to 1% from 2%

MOSCOW, March 19 (Reuters) - Fitch Ratings on Thursday lowered its forecast for Russia’s 2020 gross domestic product (GDP) growth to 1% from 2% in December, citing a global economic slump, the collapse in oil prices and a weaker rouble.

Russia's currency has been one of the worst-performing against the dollar this year here losing around 25% of its value since late 2019, ravaged by uncertainty over the coronavirus outbreak and plummeting oil prices.

Fitch said subdued external demand and the weaker rouble had reduced investment, but said it would pick up along with consumption in 2021 when oil prices rebound and the rouble recovers.

Inflation, which is currently below the central bank’s 4% target at 2.3%, is seen rising in response to the rouble’s depreciation to 4.3% by the end of the year.

Real disposable incomes will decline as inflation rises, Fitch said, but the economy should pick up in the second half of the year when the government increases its capital spending.

Russia’s central bank is expected to revise its own GDP forecast down from around 2% at its board meeting on Friday, where it will also make a decision on whether to alter its key rate from 6.00%. (Reporting by Alexander Marrow; Editing by Kirsten Donovan)

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