15 Oct 2018 17:37

Central Bank: given increase in capital outflow under risk scenario, normalization to take several quarters

MOSCOW. Oct 15 (Interfax) - If the Central Bank's risk scenario materializes and there is a steep increase in capital outflow from Russia, it will take several quarters for the situation to normalize, the head of the Central Bank monetary policy department Alexei Zabotkin said during a working session at the State Duma.

"It took roughly a year for the current account to compensate for the outflow of foreign investment resulting from the shock in 2014-2015. Accordingly, probably, in the event the risk scenario materializes, roughly the same scenario will play out. That is, over the course of several quarters, the current account will absorb the capital outflow that takes place," Zabotkin said.

Given a steep increase in the capital outflow from Russia, the economy will require some time to accumulate savings in order to offset the declining volume of external financing, he said.

The Central Bank in the risk scenario of the guidelines for state monetary policy in 2019-2021 allows that the price of oil might drop to $35 per barrel next year, in which case GDP would decline in 2019. The Central Bank believes the scenario may materialize given that a number of negative factors arise simultaneously: a substantial expansion of trade restrictions, deterioration in the macroeconomic situation in the country with developing markets, an increase in the outflow of capital from them, and further expansion of international sanctions against Russia.

The CBR estimates Russia's current account surplus widened 3.8-fold to $75.8 billion in January-September 2018, from $19.7 billion a year previously, and that capital outflow increased 2.3-fold to $31.9 billion rubles from $13.7 billion.