Russian GDP to have annual decline of 3.2% in H1 2015 - Central Bank
MOSCOW. Jan 30 (Interfax) - The Russian Central Bank expects Russian GDP to have an annual decline of 3.2% in the first half of 2015, the bank said in a statement following a board of directors meeting.
According to Central Bank estimates, the annual increase in real GDP was 0.6% in 2014. A slight rise in economic activity was seen in December 2014 due to temporary factors, such as increased demand for durable goods amid increased inflationary expectations. This was accompanied by a faster transfer of exchange rate changes to prices.
In the future, a substantial drop in output is expected as external conditions worsen due to lower oil prices and closed foreign markets for Russian borrowers.
"Amid the increase in prices for the imported investment goods, deterioration in financial performance of companies, persistently limited access to long-term financing, and tighter lending conditions, fixed capital investments will continue to contract. Real wage decrease and a slowdown in retail lending growth will result in lower consumer demand. The negative impact of deteriorated external conditions will be only partially mitigated by the exchange rate dynamics. According to Bank of Russia estimates, annual GDP growth will amount to (-3.2%) in the first half of 2015. The decision taken is aimed at averting the sizeable decline in economic activity against the background of negative external factors," the Central Bank said.