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    The seal of the International Monetary Fund is seen at the headquarters building in Washington, DC on July 5, 2015

    IMF: Russian GDP to Grow 1.4% in 2017 Due to Gov't Response to Recession

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    The IMF noted that structural limitations and Western anti-Russia sanctions will nevertheless continue to weigh down on the Russian economy despite lower short-term risks emanated by the market and oil price volatility.

    MOSCOW (Sputnik) — Russia's GDP growth in 2017 is expected come to 1.4 percent as the Russian economy rebounds from a two-year recession aided by effective government policies and higher oil prices, the International Monetary Fund (IMF) said Friday.

    "The economy is exiting a two-year recession that, thanks to the [Russian] authorities’ effective policy response and the existence of robust buffers, proved shallower than past downturns. Growth is expected to reach 1.4 percent this year, supported by easier financial conditions and higher oil prices," the 2017 IMF Article IV mission to Russia said in a statement following its visit to Moscow.

    The IMF noted that structural limitations and Western anti-Russia sanctions will nevertheless continue to weigh down on the Russian economy despite lower short-term risks emanated by the market and oil price volatility.

    "Short-term risks to the economy from volatile financial markets and oil prices have diminished. Nonetheless, medium-term growth will be subdued, at about 1.5 percent, due to structural bottlenecks (e.g., demographic, technological) and the lingering effects of sanctions that restrain the potential to increase investment," the statement read.

    The IMF outlined several primary tasks to ensure further growth amid rebounding oil prices, namely, to introduce a fiscal rule to generate savings and dampen oil price impact on the economy, to reach the Central Bank's four percent inflation target while keeping a balance between inflation and recovery risks and to pursue ongoing financial reforms aimed at spurring the growth of non-commodity sectors.

    Russia is emerging from a two-year recession that began amid collapsing commodity prices, including oil, as well as Western sanctions. In 2016, Russia's economy is estimated to have contracted by 0.5 percent after contracting almost 4 percent the previous year. The first three quarters saw negative growth rates before a slight GDP increase in the fourth quarter. The Economic Development Ministry's 2017 target scenario forecast is a GDP increase of 2 percent.


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