The International Monetary Fund slashed its growth forecast for Russia for 2013 and 2014 for the third time this year, urging the government to pursue structural reforms and improve the investment climate in order to boost growth.
The IMF said in a statement Tuesday that it saw the economy growing at 1.5% this year and 3% in 2014, held back by weak investment and low demand for its exports. In June, the Fund cut its outlook for 2013 to 2.5%, after an earlier cut in April to 3.4% from 3.7%. In April, the Fund saw Russia’s economy growth in 2014 at 3.8%.
The IMF outlook for this year is even more pessimistic than that of the Russian government, which sees 2013 growth at 1.8%, down from 3.6% forecast at the start of the year.
The IMF’s representative in Russia, Bikas Joshi, said the Fund revised its forecasts after receiving new data, including figures that showed the economy grew only 1.2% in the second quarter, much less than expected.
“The new forecast is somewhat lower than the official Economy Ministry forecast, which implies that the Fund probably sees less scope for a recovery in key items such as fixed investment growth,” said Yaroslav Lissovolik, Deutsche Bank’s chief economist in Moscow.
While praising the current tight fiscal and monetary policy, the IMF calls on Russia to rely “on more efficient use of resources and higher investment rather than increasing oil prices and spare capacity.” In order to boost growth, the IMF said, Russia needed “decisive implementation of structural reforms, particularly supply-side reforms.” >> Read More