24.01.09

The Economic Development Ministry is still working on a revised macroeconomic forecast for 2009. Meanwhile, disturbing outlooks for the Russian economy are presented in the latest forecasts from Merrill Lynch, the World Bank, the United Nations, and the EBRD.

The Economic Development Ministry's more specific forecast for Russia's macroeconomic development in 2009 was supposed to be ready today. But a source close to the Economic Development Ministry told us yesterday that there are no plans to submit anything to parliament officially on January 19. Our source declined to explain why the forecast hasn't been prepared by the deadline. Perhaps the Minsitry's officials simply can't keep up with their corrections, because macroeconomic indicators are deteriorating so fast.

The Economic Development Ministry hasn't revealed any details about the new version of its macroeconomic forecast. It is very likely, however, that the previous basic scenario - with oil prices averaging $50 a barrel in 2009, industrial production falling by 3.2%, GDP growth slowing to 2.4%, and Russia's currency devaluing to 34-35 rubles to the dollar - may now become the optimistic scenario.

Western experts aren't predicting anything good for the Russian economy either. On January 16, for example, Merrill Lynch lowered its GDP growth forecast for Russia from 3.7% to 0.9%. This forecast is based on an average weighted oil price of $50 a barrel. Merrill Lynch warns that the Russian economy is expected to contract substantially, and Russia's foreign currency reserves are expected to run out by 2010. Merrill Lynch maintains that the Russian government's economic rescue plan is not effective enough, so Russia is in for "a rough landing."

The Merrill Lynch report states: "Capital outflow will be the main problem for the Russian Central Bank, and although reserves are still fairly large, their rapid decline is a cause of concern." The report notes that Russia may see its first budget deficit in six years - up to 3-5% of GDP. According to Merrill Lynch, the Central Bank will be particularly concerned about capital outflow from Russia and the steady decline of foreign currency reserves.

The World Bank is warning Russia about the same threats. It predicts that further declines in oil prices could have disastrous consequences for the Russian economy. Zeljko Bogetic, the World Bank's chief economist for Russia, says he doesn't rule out the possibility of Russia needing to request assistance from international financial organizations if average oil prices drop to $30 a barrel in 2009-10.

The United Nations also outlines some pessimistic prospects for Russia, as a transition economy. In a report on the global economic situation and the outlook for 2009, the UN presents several development scenarios for the world economy in the course of the global crisis. According to the optimistic scenario, transitions economies can expect their average growth rates to drop from 6.9% in 2008 to 4.6% in 2009, due to falling prices for oil and metals and the influence of the global financial system. But there is also a pessimistic scenario, in which the developed nations move into deep recession, reducing economic growth in developing nations to 2.7%.

The European Bank of Reconstruction and Development has also revised its forecasts for Russia in 2009. Richard Wallis, spokesman for the EBRD's Russian office, says that GDP growth is expected to fall from 3% to 2%, "with great potential for further decline."

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Source: Nezavisimaya Gazeta