IMF sees Russia's 2012 GDP hurt by euro debt crisis
Monday, 12 December 2011 | 00:00
Russia's economic growth will likely slow to 3.5 percent in gross domestic product terms next year with risks of even slower expansions remaining due to the euro zone debt crisis, an International Monetary Fund senior official said.
The fund's 2012 growth forecast for Russia was cut in September to 4.1 percent from 4.5 percent in June.
"Even if the crisis in the euro zone does not worsen, the pace of growth of the Russian economy will slow down to 3.5 percent from this year's 4.1 percent," IMF's mission chief for Russia Juha Kahkonen said during a briefing.
"This outlook is subject to significant downside risks as a worsening euro area crisis could trigger a global downturn, translating into lower commodity prices and non oil exports."
The government's official forecast sees Russia's GDP growing 3.7 percent next year.
The IMF also urged the government to be fiscally prudent and save any budget surplus, expected this year due to higher than anticipated oil prices.
The Fund also said that Russia must reduce it's non-oil budget deficit next year by curtailing subsidies, transfer, and tax exemptions, rather than increasing it, as planned. It should aim to bring the deficit down by 2015 to 4.7 percent of GDP.
Russia's non-oil deficit is estimated to be between 10-11 percent of GDP this year.
"Were the euro area crisis to deepen, policies should be geared toward maintaining economic stability," the IMF said in a statement.
"The Bank of Russia should allow the flexible exchange rate (of the rouble) to act as a shock absorber and stand ready to utilize emergency liquidity facilities to mitigate the impact on banks."
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