West Gets 'Different View of Russia's Economy' as Moscow Adapts to Sanctions

United Nations experts have improved their forecast for the Russian economy as, according to financial analyst Roman Tkachuk, Russia has successfully adapted to Western sanctions.

According to the 2017 World Economic Situation and Prospects report, Russia’s GDP is expected to grow 1.5 percent, after a contraction of 0.2 percent last year.

The January version of the report estimated that Russia’s GDP would grow one percent in 2017 and 1.5 percent in 2018. The updated version of the report improved the outlook for 2017 while the 2018 forecast remains the same.

Last week, the International Monetary Fund (IMF) said in a report that the economy of Russia and other members of the Commonwealth of Independent States (CIS) is set to recover as firming oil process have lifted market activity.

"Russia and the rest of the CIS are finally on the road to recovery, with firming oil prices lifting activity. The recovery in Russia will support activity in other CIS and Baltic countries," the report read.

In an interview with Radio Sputnik, Roman Tkachuk, senior analyst at the investment company Alpari, said that the UN has improved its forecast because the Russian economy quickly adapted to Western sanctions.

"The UN not only improved the 2017 outlook, but also revised data on Russian GDP contraction last year. Initially, there were more negative expectations because the Russian economy is adapting to the new conditions. However, it turns out that the Russian economy quickly adapted to sanctions," Tkachuk pointed out.

He also underscored that since last year global oil prices have increased by some 20 percent, which is also positive for the Russian economy.

"All these factors offers foreign organizations and companies a totally different view of the Russian economy," Tkachuk said.

The analyst suggested that, following the UN, other international organizations may also revise their economic forecasts on Russia.

"The forecast by UN experts is higher than those by other organizations, including the IMF, the European Commission and the European Bank for Reconstruction and Development. Currently, these three organizations estimated that Russia’s GDP will grow 1.2-1.4 percent this year. But now, they may revise their prognosis, in line with the UN," Tkachuk said.

The analyst also said it cannot be ruled out that in the near future one of the Western rating agencies will improve Russia’s sovereign credit rating.

"We can see that the West is reconsidering its evaluation of the Russian economy for the better," he concluded.

Russia has been hit by a downturn that began in early 2015 after falling oil prices and Western anti-Russia sanctions took bite. The country's GDP fell 3.7 percent in 2015, according to the Russian Federal Statistics Service Rosstat.

Last month, Prime Minister Dmitry Medvedev said that Russia's economic situation has changed over the past year and has entered a growth stage.
"Our economy has entered a stage of growth. We observed this at the end of last year and are observing this at the beginning of this year," Medvedev said during a meeting with President Vladimir Putin.

According to estimates of the Ministry of Economic Development, Russian GDP growth will reach two percent in 2017.

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