World Bank trims forecast for Russia’s GDP growth

The World Bank on Friday trimmed its forecast for Russia’s GDP growth this year to 1.4 percent from the previous 1.5 percent.

“A downgraded forecast for GDP growth in 2019 reflects lower oil prices,” the international financial institution said in a report.

The real GDP growth in Russia surpassed expectations in 2018, reaching 2.3 percent, up from 1.6 percent in 2017, but this was mostly due to robust global growth, higher oil prices, one-off construction projects, and Russia’s hosting of the FIFA World Cup, it said.

The bank expects Russia’s overall growth prospects for 2019-2021 to be modest given low growth potential.

Supported by relatively high oil prices, the general government budget is expected to remain in surplus in 2019-2021.

The bank expects inflation in Russia to accelerate in 2019 on the back of the increase in value added tax rate from 18 percent to 20 percent and ruble depreciation pass-through, but the inflation will return to the Russian central bank’s target of 4 percent in 2020-2021.