Macroeconomic Forecast for 2016-2018: The Economy is Passing Through the Lowest Point of the Current Crisis

Abstract

Our macroeconomic forecast of the most probable scenarios for 2016–2018 indicates that the Russian economy will pass through the lowest point of the current crisis in mid-2016, and that thereafter, from H2 2016 onwards, it will start displaying signs of stabilization and even recovery. In 2017–2018, a modicum of GDP growth seems to be likely under practically each of the possible scenarios (unless a new dramatic decline in oil prices takes place). The expected GDP growth cannot be characterized as stable because it will not be caused by the restoration of the internal business cycle, the use of idle industrial capacities and an increase in the number of weekly hours actually worked per worker employed by an enterprise. Investment activity will remain weak. The recovery of retail turnover will lag behind the recovery of real personal income, while net personal savings will be on the rise. The rate of inflation will significantly decline, but the 4% inflation target is unlikely to be achieved by the end of the period 2017–2018.