IMF: Russian economic growth projected at 1.7 pct in 2018

WASHINGTON, Economic growth in Russia is projected at 1.7 percent in 2018 thanks to rising credit and disposable incomes, the International Monetary Fund (IMF) said Wednesday after the 2018 Article IV Consultation.

“Headline inflation is projected to bounce back during the second half of 2018 to 3.5 percent at year-end, supported by the ongoing domestic demand recovery, pass through from the recent ruble depreciation, and the fading of temporary factors,” the IMF statement said. “The medium-term outlook remains muted, due to structural bottlenecks and the lingering impact of sanctions.” The main risks to the outlook are from geopolitical tensions as well as new government policy plans, it said.

The executive board, “commended the authorities for establishing a strong macroeconomic policy framework that has strengthened economic resilience.” Additionally, it was noted that the subdued medium-term outlook reflects “uncertainty stemming from geopolitical tensions and shifting global trade and financial conditions. The large footprint of the state, governance and institutional weaknesses, and insufficient infrastructure constitute structural reform priorities.” The directors emphasized implementing structural reforms to boost productivity, the supply of labor and capital, in order to enhance medium-term growth. They also welcomed plans to boost spending on health, education, and infrastructure, emphasizing that it could be achieved within the “confines of the fiscal rule.” “Directors noted that raising growth requires stronger competition in domestic markets, a leaner state, and a more vibrant private sector,” it said. “They supported measures to reduce the footprint of the state, particularly in banking and other sectors with limited rationale for public ownership in a gradual manner in line with a strengthened institutional architecture.

Source: Kuwait News Agency