Russian economy unlikely to grow more than 1.5% annually in medium term – MinFin

MOSCOW. Oct 7 (Interfax) – Internal structural problems and external conditions will limit Russia’s economic growth to 1.5% annually in the medium term, according to the Finance Ministry’s draft fiscal policy guidelines, posted on the State Duma Budget and Tax Committee’s website.

The guidelines are based on the baseline scenario of the Economic Development Ministry’s socioeconomic development forecast for 2017 and the 2018-2019 planning period. The baseline scenario assumes Urals crude will trade at $40 a barrel and that financial and economic sanctions against Russia will remain in place for the entire period.

However the MinFin is budgeting for the targeted 4% inflation for all three years, while the Econ Ministry had suggested 4.9% in 2017, 4.4% in 2018 and 4.1% in 2019.

The MinFin has also gone for its own exchange-rate forecast of 67.5, 68.7 and 71.1 rubles/$1 while the Econ Ministry in the baseline scenario it asked the government to approve in September sees average exchange rates of 65.5 rubles/$1 in 2017, 65 rubles/$1 in 2018 and 64.4 rubles/$1 in 2019 at $40 oil.

The GDP forecast is based on the Econ Ministry’s vision of 0l6% decline in 2016, followed by growth of 0.6% in 2017, 1.7% in 2018 and 2.1% in 2019.