World Bank Improves Outlook for Russia's Battered Economy

The World Bank has improved its outlook for the Russian economy. A stronger ruble and slowing inflation suggests that the economy will contract less sharply than previously expected. The World Bank now sees Russian GDP falling by 2.7 percent through 2015, a lower prediction than its previous estimate of 3.8 percent. The Bank has also increased its growth forecast on the battered economy to 0.7 percent for 2016, up from the decline of 0.3 percent forecast last month. The World bank added that the outlook for Russian's economy still remains uncertain but the new forecast will allow the central bank to increase monetary easing for the rest of 2015. Senior Russian Federation Economist Birgit Hansl announced that 'The revised forecast is largely driven by the adjustment in oil prices over the previous two months that is supporting the ruble exchange rate and a slightly faster retreat of inflation. That would allow the Central Bank of Russia to pursue monetary easing at a more rapid pace for the rest of 2015, as a result bringing down borrowing costs and increasing lending to firms and households. Both investment and consumption growth would contract slightly less than previously expected.'