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    IMF Downgrades Russia’s Economic Prospects Amid Ukraine Tensions

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    The International Monetary Fund said in a report Tuesday that a downgrade in expectations for Russia's economic growth this year is due in part to the recent geopolitical tensions over Ukraine.

    MOSCOW, April 8 (RIA Novosti) – The International Monetary Fund said in a report Tuesday that a downgrade in expectations for Russia's economic growth this year is due in part to the recent geopolitical tensions over Ukraine.

    The outlook projected “lower growth in both Russia and Ukraine, and adverse spillovers to the CIS region.”

    “Russia's GDP growth is projected to be subdued at 1.3 percent in 2014,” the IMF said in its latest World Economic Outlook Report, down from the prior estimate of 2 percent. The document stressed that the political turmoil at the beginning of this year and the reunification of Crimea has further affected the already weak growth forecast for Russia.

    The IMF said growth will be negatively impacted by downward pressure on the ruble, greater capital outflows and inflation exceeding last year’s target range.

    A possible slowdown is not a uniquely Russian development, as the IMF expects growth in developing regions of Europe to decelerate this year as well. The forecast for Russia sees a risk of further turmoil as possible sanctions may disrupt trade and finance, driving risk-averse investors out of the country.

    The optimistic scenario outlined by the IMF predicts a stronger-than-expected recovery in resource-rich Russia if economic growth in advanced economies keeps oil and gas prices high.

    According to the IMF, Russia should continue to rely on exchange rate flexibility, keep monetary policy focused on anchoring inflation, and maintain a broadly neutral fiscal policy in order to manage the potential effects of financial turmoil and geopolitical tensions.

    The IMF previously lowered Russia’s GDP growth forecast for this year from 3 percent to 2 percent.

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    economy, GDP, International Monetary Fund
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