FXStreet (Mumbai) – Cheaper oil and Western sanctions still weigh on Russia’s GDP outlook, which may shave 9% off the country’s GDP, the International Monetary Fund (IMF) said in a recent report.
The Fund estimated the immediate effect of sanctions and counter-sanctions could wipe between 1 and 1.5% off GDP, but the cumulative loss in output could reach 9% over the medium term.
Key Findings:
“The effects of sanctions in terms of external access to financial markets and new investment technology will linger.”
“Slow-moving structural reforms, sluggish investment and adverse population dynamics are all part of the picture,”
“The external shocks, added to pre-existing structural weaknesses, are certainly weighing on Russia’s growth prospects. Maintaining a prudent fiscal policy and reviving slow-moving structural reforms could help unlock Russia’s growth potential.”
As for monetary policy, the IMF said that in response to external shocks “the Central Bank of Russia appropriately allowed the ruble to float, setting its medium-term target for inflation at 4%.”
“Monetary policy normalization should continue at a prudent pace, commensurate with declines in inflation and inflation expectations, while carefully assessing the likelihood of upside risks to inflation.”
(Market News Provided by FXstreet)