Russia’s Ministry of Economic Development released its economic forecast for the next three years that shows a return to economic health from 2017, albeit at anemic growth rates.

The ministry offered two scenarios, basic and plus, the main difference being the predicted price of oil. It also included projects based on actual economic results from April.

In the basic scenario, oil prices are assumed to remain at an average of $40 for the next three years, whereas in the plus scenario oil prices will rise to $55 by 2019.

In terms of growth there is little difference between the two outlooks, with growth remaining under 3% in both and a few tenths of a percentage point between them: Russia will be growing at best by 2.4% in 2019 under the plus scenario.

The other key parameter being watched is inflation: the Central Bank of Russia (CBR) is working hard to get inflation down to its target of 4% as part of a broader plan to reduce the cost of capital and so engender investment driven growth. In both scenarios this target will only be hit in 2019, but with inflation predicted to fall to under 5% in both cases from the current 7.1%, presumably investment could start rising dramatically from next year.

And while the difference between the scenarios is not great, the affect on the dollar value of the Russia economy is more noticeable. Russia’s economy is worth circa $1.2 trillion today, down from a pre-crisis peak of $2.1 trillion in 2013. Under the basic scenario that value will grow to $1.5 trillion in 2019 and to $1.72 trillion in the plus version.

 

MED 3 year forecast
	2016			2017			2018			2019
	April	basic	plus	April	basic	plus	April	basic	plus	April	basic	plus
Avg oil, $/bbl	40	41	41	45	40	50	40	40	55	40	40	55
GDP	-0.2	-0.6	-0.6	0.8	0.6	1.1	1.8	1.7	2.1	2.2	2.1	2.4
CPI (eop)	6.5	5.8	5.8	4.9	4.9	4.6	4.5	4.4	4.2	4	4.1	3.9
RUB/$ eop	67.2	67	67	64.8	65	61.1	64.1	64.6	59	62.7	64.1	58.7
Nominal GDP RUB bn	84.3	82.8	82.8	89.5	87.1	88.6	95.4	92.4	95	101.4	98.3	101.2
Dollar GDP equivlaent $ trillion	1.25	1.24	1.24	1.38	1.34	1.45	1.49	1.43	1.61	1.62	1.53	1.72
source: Ministry of Economic Development