MOSCOW (Reuters) - Russia’s economy will contract by 2.8 percent this year but is seen expanding 2.3-2.4 percent each year in 2016-18, helped by recovering oil prices, updated forecasts by the Economy Ministry showed on Thursday.
The forecasts were in line with previous comments by officials, who had said that the ministry had revised down its official estimate of this year’s contraction to 2.8 percent, from an earlier 3 percent.
The projections assume an average Urals oil price of $50 (33 pounds) per barrel this year, sticking to an existing oil price forecast which Economy Minister Alexei Ulyukayev has previously described as “conservative”.
Urals is presently trading close to $60 per barrel, at a small discount to international benchmark Brent. URL-NWE-E URL-E LCOc1
Russian officials have recently painted a more upbeat picture of economic prospects, but poor data for April showed that Russia is still paying heavily for last year’s oil price plunge and Western sanctions imposed as a result of the Ukraine conflict.
The ministry expects growth to return from next year, with a forecast of 2.3 percent growth in 2016-17 and 2.4 percent in 2018, with the oil price recovering to $70 per barrel by 2018 under its base scenario.
Inflation is seen ending this year between 11.6 and 11.9 percent, falling to 7.0 percent in 2016, 6.3 percent in 2017 and 5.1 percent in 2018.
The rouble is seen averaging 60 roubles per dollar in 2015, strengthening to 53.2 roubles per dollar in 2018.
In addition to its base scenario the ministry also published an “optimistic scenario” that assumed higher oil prices, with Urals averaging $60 per barrel this year and rising to $90 per barrel by 2018.
Under those assumptions, the economy was seen contracting 2.5 percent in 2015 and recovering more strongly.
Reporting By Jason Bush; Editing by Christian Lowe