European Commission named the main risks for the Russian economy

Source

APK-Inform

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To date reduction of petroleum prices in terms of high dependence on the commodity exports, weakening of the RUR exchange rates, and the high inflation, are the main risks for the Russian economy, informed the forecast of the European Commission on the global economy, published on November 4.

“Economic growth in Russia had been on a declining trend for some time as the growth model based on the export of natural resources ran out of steam, diversification of the economy made only little progress and investment stalled. These trends are exacerbated by the fall-out from geopolitical tensions, including sanctions, which disrupt trade and financial flows, undermine confidence and take a heavy toll on investment and consumption,” - informed the European Commission.

According to experts, geopolitical tensions, particularly the unfavorable situation around Ukraine, will make significantly strong impact on the Russian economy in 2015.

“A gradual recovery of the Russian economy may be expected only in 2016, albeit still below the growth rates observed in previous years, as structural bottlenecks are increasingly weighing on potential output growth… Exports are expected to decelerate in 2014 and to pick up moderately in 2015 and 2016 in line with the anticipated recovery in main export markets and provided that geopolitical tensions ease in the course of 2015,“ - forecasted the European Commission.

“A sharp slump of imports is expected for 2014, on the back of slower domestic demand, a weaker exchange rate and the Russian ban on certain food imports. Exports are overall more resilient than imports since sales of Russian oil and gas have been largely unaffected by the geopolitical tensions," - the forecast said.

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