BLBG:Russia Faces Recession for Two Years With $50 Oil, IMF Says
Russia’s economy would slip into recession for one to two years if oil prices fall to $50 a barrel next year and stay at that level, according to the International Monetary Fund.
The worst-case scenario “illustrates the continuing vulnerabilities of the Russian economy” because of its dependence on commodity exports, said Odd Per Brekk, the IMF’s senior representative in Moscow.
Russia will grow 4.3 percent this year and 4.1 percent in 2012, less than previously forecast because of a worsening outlook for oil prices, the Washington-based lender said yesterday in a report. In June, the IMF had estimated growth of 4.8 percent and 4.5 percent.
“We expect a continuation of the fairly tentative recovery in the Russian economy combined with fairly high inflation,” Brekk told a round-table today in Moscow, after the forecast cut. “But even with those downward adjustments, we still consider the risks to be on the down side.”
The global recovery is faltering and Europe’s sovereign- debt crisis is roiling markets, clouding growth prospects for the world’s biggest energy exporter. Finance ministers and central bankers are preparing to travel to Washington this week for the annual meeting of the 187-member IMF to discuss the debt crisis and the world slowdown.
Oil Prospects Dim
Prospects for oil, Russia’s chief export earner, have deteriorated since the IMF reviewed its economic forecasts in June, the report said.
Urals, Russia’s benchmark export blend, gained about 0.5 percent to $112.15 in northwest Europe, up about 45 percent from a year ago, according to data compiled by Bloomberg. The crude dropped as low as $32.34 in December 2008 after a high of $142.50 in July of that year.
Russia’s non-oil deficit, or the shortfall excluding revenue from oil and gas sales, remains a “source of concern” and is a better measure to gauge budget stability, Finance Minister Alexei Kudrin said today.
The non-oil deficit reached 12.6 percent of gross domestic product last year, 4 to 5 percentage points above an acceptable level, Kudrin told lawmakers in Moscow today. That compared with a total budget gap of 4 percent.
To contact the reporter on this story: Henry Meyer in Moscow at hmeyer4@bloomberg.net
To contact the editor responsible for this story: Balazs Penz at bpenz@bloomberg.net.
