World Bank cuts Russia growth outlook, warns on global economy
January 14, 2015, 6:39 am

File photo of Naval cadets lowering the flag of the navy cruiser Aurora in front of a giant poster of Russian President Vladimir Putin and Prime Minister Dmitry Medvedev [Archives]

The Washington-based lender  has cut its global growth forecast as well predicting growth rates of 3 per cent this year and 3.3 per cent next year, below its June forecast of 3.4 per cent and 3.5 per cent respectively.

“The gobal economy is at a disconcerting juncture,” warned World Bank chief economist Kaushik Basu on Tuesday.

In its bi-annual report, the bank said that sustained low oil prices will weaken economic activity in major exporting countries, like Russia, while oil importing countries, including China, will be the big winners.

“The lower oil price, which is expected to persist through 2015, is lowering inflation worldwide and is likely to delay interest rate hikes in rich countries. This creates a window of opportunity for oil-importing countries, such as China and India; we expect India’s growth to rise to 7% by 2016,” said Basu.

The Russian government has talked repeatedly about getting rid of the unduly energy-dependent growth mode.

Russia’s economy will get “barely back into positive territory in 2016 with growth expected at 0.1 per cent,” the World Bank report says.

The World Bank earlier projected Russia’s GDP to contract by 0.7 per cent in 2015 and increase by 0.3 per cent in 2016.

The report said the tensions between Russia and Ukraine, the associated economic sanctions, capital flight and limited access of Russian companies to the international capital markets are the key factors behind the poor economic outlook.

The World Bank has also lowered its forecast for Ukraine’s economy, which has been severely hit by the months-long conflict, “with output estimated to have contracted an estimated 8.2% in 2014.”

 TBP and Agencies