Abstract
As the financial crisis in Russia deepened in October 2008, the government was
particularly proactive in
developing policy mechanisms to shore up the
economy and domestic capital markets. Thus far, Moscow
has announced
approximately US$200bn in varying forms of financial aid for struggling banks
and
corporates. Cheap capital has also been put on offer from the Central
Bank of Russia (CBR) which had
lent RUB182bn in unsecured funds to Russian
banks.
We expect the government to continue aggressively providing support
for the economy, especially as
conditions are expected to worsen in 2009.
There is also recognition from government officials that
revenue growth
was likely to stall in line with falling oil prices.
We have slashed our
growth forecasts for Russia to take into account a rapidly decelerating
global
economy, falling oil prices and tightening credit conditions in the
domestic banking sector. While a robust
H108 performance ensured that
full-year growth in 2008 remained relatively strong at 5.9%, economic
expansion is expected to fall markedly further to an 11-year low of 3.6% in
2009. We expect a general
recovery to begin in 2010, with headline real
GDP growth forecast to come in at 4.8% that year and
average 6.4% between
2011 and 2013. Russian economic growth is expected to remain highly
correlated
to global commodities prices through the long term and by 2010,
oil prices are forecast to rise back above
the US$80.00/bbl level.
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