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Expensive oil will not save Russia from recession

 Дорогая нефть не спасет Россию от рецессии

Photo: Tyrone Siu / Reuters

Even with the stabilization of oil prices at $50 a barrel in the next three years the Russian economy get out of recession — the forecast of analysts gave a “development Centre” Higher school of Economics (HSE). The fall in GDP over 2015-2019 under this scenario will amount to 5.6%, and growth will not be possible before 2020.
HSE experts have examined two scenarios of Russian economic development depending on oil prices — provided that the current anti-Russian sanctions remain in force. In the first scenario, at $35 per barrel by 2020, the GDP in 2016 is 1.6%. However, the total fall in GDP for the 2015-2019 may be 8.1 per cent.
The second, more optimistic scenario gives the economy the chance to grow. Even at stabilization of prices at $50 in 2017-2020 years prolonged recession is inevitable. According to the researchers of the HSE with oil at $45 per barrel, the fall in GDP in 2016 will reach 0.8%, the budget deficit to 2.7% of GDP with further reduction to 1% of GDP. The total decline in GDP over 2015-2019 in this scenario, analysts valued 5.6%. “The rise in oil prices to $50 a barrel facilitates the process of adaptation of economy to new conditions, but does not allow access to the sustainable growth earlier than 2020”, — stated in the study.
Reduction of budget expenditures due to institutional constraints (including the availability of “protected” articles and strong positions of defence and resource lobby) will be, above all, to worsen the situation in the social sphere. Public sector wages for 2015-2020 will be reduced by 22-30% in real terms. This will decrease the amount and quality free of charge fiscal services. The expected continuation of the recession will lead to the fact that the decline in real incomes will continue for a period of one to three years,” economists are projecting.

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