Moscow: Russia´s Central Bank has said the economy would shrink by four to six percent this year, as hopes of a revival were dashed by the coronavirus and falling oil prices.
“The Bank of Russia has substantially reviewed its baseline scenario parameters. GDP is forecast to decrease by four to six percent in 2020,” it said in a statement. Measures to prevent the spread of the coronavirus and the decline in oil prices have had “a substantial negative impact on economic activity”, it said.
Growth will start to recover at 2.8 to 4.8 percent next year and go on to 1.5 to 3.5 percent in 2022, it said, while predicting the price of oil to rise from $27 per barrel to $35 in 2021 and $45 in 2022. The board of directors also cut the bank´s key interest rate by 0.5 percentage points to 5.5 percent.
It was the first time since early 2014 that the rate has been cut this low, and the bank said it “holds open the prospect of further key rate reduction”. “The situation has changed dramatically” since the board last met in March, with “significant restrictive measures” introduced worldwide slowing down the economy, it said.
The central bank expects Russia´s exports to fall by 40.3 percent to $250 billion this year, and imports by 18.5 percent to $207 billion, Interfax reported. The price of oil, a key Russian export, plummeted even before the coronavirus lockdown due to a price war between Russia and Saudi Arabia after Moscow refused to cut supply. But after the world´s exporters agreed to cut output, crude had begun to recover. The Capital Economics consultancy on Thursday predicted that “emerging Europe will experience its largest decline in real GDP this year since the collapse of the Soviet Union.”
