Trump, Ruble, Oil Prices and Russia’s Economic Outlook2 February, 2017
Dr. Daniel Thorniley, co-founder of CEEMEA Business Group, has made the following forecast based on a survey of CEEMEA Business Group community members.
Ruble exchange rate. In view of a number of positive factors, the ruble should stabilize at 59-66 rubles for one US dollar for the next two years. The rate of euro to dollar should remain on average at 1.04 in 2017-2018, while the ruble should stabilize at around 63 rubles for one euro.
Inflation. The inflation rate is decreasing, and inflation should continue to slow down in 2017 to an average of 5.3% dropping down to 5% by the end of 2017.
Lifting of sanctions. Import substitution has been beneficial to some economic sectors such as, for example, Russian agricultural producers. They have started competing actively with foreign enterprises so the lifting of sanctions could affect them in many ways. International holdings working closely with Russian producers will be in a similar situation.
GDP. Both CEEMEA experts and the Central Bank of Russia anticipate that the economic situation in Russia should improve from quarter to quarter. Although the GDP in 2017 will not offset the negative trends of the previous year, a 1.6% growth is still expected. According to the Russian Ministry of Economic Development, PMI business activity index at 56.6 was at its highest in 50 months in 2016 and showed maximum quarterly growth in 4 years.
Economic sectors. The economy is slowly recovering, and positive trends are already noted in trade despite a lower purchasing power, while the trend in retail trade remains negative (-4.4% as of October 2016). The production industry is inconsistent with some indicators rising while others are falling. For example, car manufacturing in the middle of 2016 was comparable to the lowest figures of 2010. The development pace in the construction industry rose by 2.8% in 2016 compared to 2015. The agricultural sector, which grew by 2.6% in October 2016, is a bit of a mixed bag where harvest volumes are growing, but product quality lags behind.