Russia’s economy to shrink by less than 4% in 2020, minister says


Investing.com - Financial Markets Worldwide

No results matched your search

Economic Indicators17 hours ago (Sep 08, 2020 11:20AM ET)

© Reuters.  © Reuters.

MOSCOW (Reuters) – Russia’s economy could contract by less than 4% in 2020, Finance Minister Anton Siluanov said on Tuesday, an improvement on previous assessments and a positive sign for an economy bruised by low oil prices and the COVID-19 pandemic.

Speaking at a financial forum in Moscow alongside Central Bank Governor Elvira Nabiullina, Siluanov warned against excessive borrowing to finance Russia’s economic recovery.

The debt-to-GDP ratio will reach nearly 20% in 2021 and must not increase further, Siluanov said.

And at a time when Russia is facing the real threat of additional sanctions over the suspected poisoning of Kremlin critic Alexei Navalny, Siluanov sought to woo foreign investors, attracted to Russia’s OFZ treasury bonds thanks to their relatively attractive yields.

“The amount of debt that we borrow this year will depend, among other things, on whether foreign investors trust us,” said Siluanov.

“If we do not have as many foreign investors, we will not borrow as much. Therefore, we need to value this trust.”

Speaking ahead of the central bank’s rate-setting meeting on Sept. 18, Siluanov said lower interest rates would help revive economic growth.

Economists polled by Reuters last month, before the rouble’s rapid depreciation, forecast a 4.7% economic contraction in 2020 and said subdued inflationary risks could give Russia room to cut rates for a fifth time this year.

Nabiullina gave no new signals as to whether the central bank would cut the key rate from 4.25% next week, reiterating the bank’s earlier statement that there was room for a monetary policy manoeuvre.

“All will depend on how the situation with the pandemic evolves, with the economy in general, with inflation,” she said.

The Bank of Russia sees inflation at 3.7-4.2% by the end of the year, and Nabiullina was insistent that there is no need to revise its 4% inflation target.

Neither Nabiullina nor Siluanov addressed the issue of the weak rouble, dented by risks of Western sanctions against Moscow related to the turmoil in Belarus and the poisoning of Navalny.    

Related Articles

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.

LEAVE A REPLY

Please enter your comment!
Please enter your name here