BOFIT Viikkokatsaus / BOFIT Weekly 2020/27

Outlooks for the Russian economy of major international economic and financial organisations have been revised further down from previous forecasts for this year. Forecasts released in May and June predict that Russian GDP will contract by 4.5−8 % this year. Latest consensus forecasts see the Russian economy contracting by around 4.5−5 % this year. The wide range of forecasts still in late spring and early summer reflects very high short-term uncertainty.

GDP next year is expected to recover by around 3−4 % from this year’s slump. The annual crude oil price assumptions in forecasts of international organisations for this year run between $30 and $38 a barrel. The average oil price is expected to rise to around $38−40 next year. CBR governor Elvira Nabiullina recently noted that the central bank’s forecast so far remains unchanged. GDP should thus contract this year by 4−6 % if the price of Urals crude averages $27 a barrel, and even if, as  Nabiullina pointed out, the on-year contraction of the GDP in the second quarter of this year may have been deeper than the roughly -8 % expected earlier. The CBR sees GDP recovering to the 2019 level in the first half of 2022.

Some forecasts, besides addressing falling oil prices and the coronavirus pandemic, lockdowns and other restrictive measures that have knocked down demand domestically and internationally, also consider how cooperation among OPEC members, Russia and other oil-producing countries plays out. On one hand, they note that the latest OPEC+ agreement on production cuts will press down Russian GDP. On the other hand, the cuts are considered insufficient compared to the low global demand of oil in order to properly support oil prices.

The GDP projections for some other large emerging economies were also downgraded for 2020. This especially concerns Turkey, India and Brazil.

GDP forecasts for 2020−2021

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