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The Central Bank has abandoned optimism

Центробанк отказался от оптимизма

Elvira Nabiullina believes in the growth of the economy until 2018.

The Central Bank revealed details of a new stressful scenario of economic development, where a barrel of Urals oil will cost $25 for 2016-2018. The parameters of the negative scenario published in the regulator’s report on monetary policy (DCT). It involves the maintenance of economic sanctions against Russia until 2018, decrease of GDP by 2-3% in 2016 and inflation above 7% by the end of this year. The Chairman of the Central Bank Elvira Nabiullina at the press conference said that the probability of a risk scenario “still low”. Experts are solidary with this point of view, calling a risky scenario “second choice”.

That the Central Bank has a new risk scenario of economic development, said the first Deputy Chairman of the regulator, Dmitry Tulin in February on the sidelines of the state Duma. In the report of the OST States that it is designed with the “lingering external uncertainties”, including adverse developments in China’s economy and a more expressed influence of the “political aspects” to the price of oil.

“This scenario assumes a reduction in the price of Urals crude oil to $25 per barrel in 2016 (now above $41) and storing it at a low level in 2017-2018, says the report. — The negative impact of external economic environment on the Russian economy is realized through reduction of income from exports, a decline in the creditworthiness of the borrowers indebted in foreign currency, worsening expectations for growth in the Russian economy and further reduce the attractiveness of investments in the Russian economy for domestic and foreign investors.”

In addition, the Central Bank lowered its basic forecast of development of economy and completely abandoned the optimistic scenario.

— In the new baseline scenario assumes very slow recovery from $30 per barrel on average in 2016 to $40 per barrel in 2018, said the head of the Central Bank. — This scenario is close to the December risk. However, the forecast on the main indicators of the baseline scenario is somewhat better than it was in the past, given the more favourable dynamics of the economy and inflation that we see now. We expect a decrease in GDP by 1.3% and 1.5% in 2016 and close to zero growth in 2017. In 2018, the annual growth rate of GDP will be positive. A gradual recovery in economic activity will contribute to the further development of processes of import substitution and expansion of non-oil exports.

According to experts interviewed by “Izvestia”, is also the most likely implementation of the baseline scenario.

— The main factors that may encourage the consolidation of oil prices at a low level, is the increase in exports from Iran, the resumption of shale companies in the US, the downside risks for the global economy, says the chief analyst of the Bank Natalia Vasilyuk. In such circumstances, according to our estimates, GDP may shrink 1.5% in 2016 due to the continuing decline in consumer spending and investment deepening recession.

According to managing partner of the audit company “2K” Tamara Kasyanova, the Central Bank follows a cautious policy, “fearing premature calculations on fractures in the economy.”

— No euphoria witnessed in the last month, in which increased oil prices, the ruble strengthened, the industrial output showed a positive trend, no, — said Tamara Kasyanova. — The Central Bank left key rate unchanged (11%). To expect the resumption of economic growth in very volatile markets it would be highly imprudent. Even if positive trends in the economy will be fixed, this will be much easier to cope than with unreasonable expectations. The Central Bank comes from today’s realities. But today’s realities — not just $40 per barrel and $40 per barrel on overstocked the market; the strengthening of the ruble and the weakening of the dollar on the background of the same oversupplied oil market. With all the positive trends of recent months should not forget about the budget deficit, the problems of market borrowings, the problems of raising capital, the effect of the sanctions regime, instability in China’s economy (and therefore world) and the many negative external and internal factors.

Therefore, to rely on this background to ensure a positive dynamics in the economy, according to Tamara Kasyanov, imprudent.

Besides the base variant is correlated to the forecast of international financial institutions, — said the interlocutor. — The Central Bank suggested that risk prediction as a fallback in case of sharp deterioration of the situation in the Russian and world economy. On the background of existing risks is clearly not superfluous.

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