The economy will enjoy a stronger commodity-driven rebound than first estimated and authorities should avoid a sudden removal of stimulus measures to ensure that the domestic economy keeps pace, the Organization for Economic Cooperation and Development said Thursday.
Gross domestic product of the world’s biggest energy producer will expand 4.9 percent in 2010, compared with a June forecast for 3.7 percent growth, the OECD said. Output will contract 8.7 percent this year, more than the 6.8 percent estimated in June, it said.
“Although recovery is in prospect, the large output gap and subdued inflation suggest that policy stimulus should not be removed too hastily,” the OECD said. “Fiscal policy should be managed to avoid dislocative demand effects from a surge of expenditures in late 2009 followed by a tightening in 2010.”
The oil-reliant economy emerged from recession in the third quarter, Finance Minister Alexei Kudrin said last month, as a rebound in commodity prices helped exports. The annual contraction eased to 8.9 percent last quarter from a record 10.9 percent in the three months through June. Energy products make up about 70 percent of export revenue, with this year’s 86 percent increase in Urals crude driving Russia’s recovery.
“Fiscal and monetary stimulus and the recovery of global demand should result in a strong rebound of output towards the end of 2009,” the OECD said. “A large part of the policy stimulus will be felt only late in the year, as fiscal expenditure is back-loaded and a series of interest rate cuts began only in the second quarter.”
The Central Bank has cut the key refinancing rate eight times since April to a record-low 9.5 percent and the government has set aside 2.5 trillion rubles in stimulus to steer the economy through the global crisis, including a deployment of measures to aid specific industries.
“Discriminatory” trade policies will slow Russia’s recovery and should be “reversed or allowed to expire as soon as possible,” the OECD said. At the same time, the “high concentration of assets and deposits in a few state-owned banks” is “not healthy” for the banking sector’s development, it said.
Russia, which isn’t a member of the OECD, raised duties as of Jan. 12 on imported new and used cars, to protect domestic producers. The tariffs range from 30 percent to 35 percent.
“Laying the foundations for sustained rapid growth will require unwinding some of the distortive consequences of the crisis,” the OECD said.