Interfax: Ulyukayev: GDP likely to decline in 2015 if low oil prices persist

MOSCOW. Oct 24 (Interfax) – If current prices for oil persist in 2015, Russian GDP, retail trade, real incomes and investment will all decline, Ulyukayev said at a business breakfast hosted by Rossiiskaya Gazeta.”

“If the current price of oil persists, then as soon as this year there will be practically no growth in real individual incomes and retail trade. If there is growth, it will be very small, and in recent years consumer spending has been pulling us through. In 2015, we will be in negative territory for all of these indicators,” he said.

“This is or course very serious. Accordingly, very great risks are arising that overall economic growth will be negative. Investment growth will also be below zero,” he said.

The winners in the situation will be those industrial sectors competing with imports, due to ruble weakening.

Low oil prices will not hurt the budget, because although revenue is lower due to low oil prices, revenue rises due to ruble weakening, and the two effects tend to cancel each other, he said.

“The budget this year will have a much bigger surplus than was initially supposed. The 2015 budget will be roughly what was forecast. Everything we lose from low oil prices we win from ruble weakening. So there are no risks to the budget on that score,” he said.

“But the economy does not survive on the budget alone. The budget is only 20% of GDP. The remaining 80%, those are household budgets and companies that have no such self-regulating mechanism. They will suffer from the current situation,” Ulyukayev said.

The Economic Development Ministry’s basic forecast for 2015, which assumes an average annual price for Urals crude of $100 per barrel, forecasts GDP to grow 1.2%, retail trade to expand 0.6%, real incomes to rise 0.4% and investment in fixed assets to increase 2%.

[featured image is file photo]