Russia’s economic outlook improves on stable energy prices and economic adjustments

The economic outlook of Russia has improved due to steady energy prices and economic adjustments. Oil production in the country has increased to a record level of 11.2 m bbl/day and that has contributed to the gradual rebound in Russia’s economic growth as well.

Thus consensus expects the Russian economy to shrink just 0.6 percent by now, while the economy is likely to expand 1.3 percent next year, said Erste Group Research. The projection for this year economic growth has been increased considerably from the earlier level of -1 percent.

The jobless rate of Russia is expected to stay low and reach 5.7 percent by the end of 2016. Meanwhile, inflation continues to slowdown in the economy. According to consensus, inflation is expected to decelerate to 7.2 percent by the end of this year and slow down further to 5.5 percent next year. The current trend in the pace of prices rises shows a considerable rebound over the previous year, when consumer prices increased 15.6 percent.

On the other hand, Russia’s current account balance continues to be in positive territory. This year, current account surplus is expected to reach 2.9 percent of the GDP, whereas next year it is anticipated to increase to 3.3 percent. Meanwhile, budget deficit is expected to reach -3.7 percent of the GDP in 2016 and is expected to fall to -2.8 percent next year, according to Erste Group Research. The Central Bank of Russia has responded to the rebound in the economic situation by cutting its refinancing rate in mid-September to 10 percent from 10.5 percent.