Goldman Sachs still expecting Russia's GDP to grow in 2015
MOSCOW. Nov 14 (Interfax) - Goldman Sachs (GS) expects the Russian economy to grow in 2015 despite a significant decline in consumer demand, GS said in a report.
Economists with the investment bank have lowered their growth forecasts for the Russian economy in 2014-2015, though they still believe that Russia's GDP will improve next year.
The growth forecast for 2014 was lowered to 0.3% from 0.5% and for 2015 - to 1% from 1.5%. In addition, GS now expects consumption in Russia to fall 2.2% next year, following 0.6% growth this year.
Goldman Sachs said it revised its forecast for the ruble's exchange rate, lowering it by an average 8%. The bank expects it to total 51 rubles, 52 rubles and 53 rubles against the bicurrency basket, respectively, for the three-month, six-month and 12-month perspective. The new forecast for the ruble's exchange rate against the US dollar is therefore 46.2 rubles/$1 in three months, 47.7 rubles/$1 in six months and 49.6 rubles/$1 in 12 months.
GS said these levels are fair for the ruble's exchange rate if oil prices are at $85 per barrel in 2015 and if sanctions remain in force. The bank said it considered the assumption about sanctions "conservative." In 2016, GS expects oil prices to rise to $90 per barrel.
The report also notes that GS economists have raised their 2015 inflation forecast, which still looks fairly optimistic.
Goldman Sachs raised its forecast for inflation in Russia to 5.4% in 2015 from 4.2%. The bank believes that core inflation will be 4.6% for next year. GS therefore believes that Russia's Central Bank will begin lowering its rates in 2015 with the key rate falling 250 basis points from its current 9.5% at the beginning of Q2 2015. Inflation will total 8.5%-9% for 2014, the report says.
The Central Bank in its updated monetary policy published on Monday significantly downgraded its forecasts for Russian economic growth in 2015-2017 under the basic scenario, essentially acknowledging there will be zero GDP growth in the next two years. The Central Bank said GDP might fall 3.5%-4% if oil prices reach $60 per barrel in 2015.
"We cut our real GDP forecast for 2015 to negative 1.5% from an already below consensus 0% to take into account our new 2015 oil price forecast, which is down $10/bbl to $98/bbl. We also cut our RUB forecasts to RUB41/$1 for 2014 eop and to RUB44/$1 for 2015 eop due to the likely external debt deleveraging in the weaker oil environment," Bank of America Merrill Lynch Research (BofA-ML) said in mid-October.
In addition, Morgan Stanley forecast in early September that the Russian economy would see GDP fall 0.5% in 2015. It was previously expected that Russia's GDP would grow 1.9% in 2015. Analysts from Morgan Stanley said that sanctions, which will remain in force for an extended period, will nonetheless drive the Russian economy into a recession.