Band Andrey Ostroukh

MOSCOW, May 31 (Reuters)The Russian economy will rebound this year after the global COVID-19 crisis, even despite more expensive loans in the country, but will slow again in 2022, according to a Reuters poll on Monday.

Russia’s commodity-dependent economy is on track to recover from a 3% contraction in 2020, the sharpest in 11 years, but the absence of structural reforms and the fragility of investments could cloud its outlook.

Consensus forecasts from 20 analysts surveyed at the end of May suggest that gross domestic product will rise 3.5% this year, a slight improvement from the 3.4% predicted a month ago. Growth expectations for 2022 remained unchanged at 2.4%.

“Most of the recovery growth will end this year, along with fiscal and monetary stimulus,” Russian rating agency ACRA said.

The central bank, which cut its key interest rate to a record 4.25% in 2020 to help the economy with cheaper loans, is expected to raise rates in 2021 amid high inflationary risks.

The central bank is expected to raise its key rate to 5.25% from 5% on June 11 and raise it to 5.5% in the third quarter where it will maintain it by the end of the year, with forecasts for the end of 2021 ranging from 5.25% to 6%.

The Bank of Russia may consider raising rates by a larger 50 basis points in June to curb inflation, Sovcombank analysts said.

Annual inflation, the central bank’s main area of ​​responsibility, is expected to climb to 5.8% in May from 5.5% in April, above the target of 4%, according to the poll.

Year-end inflation is now seen at 4.8%, compared to 4.5% predicted by the April poll.

The outlook for the ruble has remained broadly unchanged, suggesting that a significant geopolitical drag remains.

The currency is expected to trade at 73.00 per dollar and 90.30 per euro in 12 months, compared to 72.20 and 89.00 respectively in the previous survey.

Russia’s official exchange rates for Monday were 73.59 to the dollar and 89.67 to the euro.

Most of the Reuters poll predictions were based on at least 10 individual projections.

(Reporting by Andrey Ostroukh; Editing by Nick Macfie)

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