A positive 2017 for the Russian economy?
December 19, 2016, 4:23 pm

Putin’s Russia has been signing trade deals with powerful economies to overcome the effects of sanctions [Xinhua]

Analysts point to the surge in global oil prices as a positive trend to help Russia lessen the impact of EU and US sanctions but caution that the recovery from recession won’t happen immediately.

The Central Bank’s assessment of the health of the Russian economy is based on the math that oil prices are at $40 a barrell.

Although recent oil prices have hovered around $55 a barrel, the Bank maintains that overall in 2016, GDP will contract by up to 0.7 per cent but grow in 2017 by up to one per cent.

The assessment is in tandem with International Monetary Fund (IMF) chief Christine Lagarde’s confidence in how Russia has handled its recession particularly amid unstable and weak energy prices in the past two years.

Lagarde had met with Russian President Vladimir Putin on the sidelines of the Asia-Pacific Economic Cooperation summit in Lima, Peru, which ended last November.

According to Russian officials who attended the meeting, Lagarde said that Russia could be on the path to sustainable recovery but said the banking sector needed to do more to encourage lending.

But a state statistics report from Rosstat showed that retail sales had fallen further than anticipated by experts, registering a drop of 4.4. per cent in October year-on-year.

The Rosstat report released earlier this week also showed that capital investment had retreated 2.3 per cent since the beginning of the year while real wages did edge up somewhat, but still below estimates.

Meanwhile, in a blow to Russia’s recovery efforts, the EU on Monday extended for another six months punitive economic sanctions against Russia over its alleged involvement in Ukraine.

But Russia has been trying to boost its economy by circumventing sanctions and securing bilateral trade deals with powerful global economies.

On Friday, in conclusion to President Vladimir Putin’s visit to Japan, Moscow and Tokyo signed a $2.5 billion deal in energy, health and transportation.

Under the deal, Russian energy companies will work with Japanese industrial giants to jointly develop oil fields on Russian territory.

The BRICS Post with inputs from Agencies