Support The Moscow Times!

IMF Halves Russia Forecast

The International Monetary Fund halved its forecast for Russia's 2015 gross domestic product to 0.5 percent on Wednesday, saying that international tensions had created downside risks to its estimates.

"Geopolitical uncertainties are having a big direct impact on the Russian economy," Antonio Spilimbergo, the IMF's mission head to Russia, told journalists.

Russia is embroiled in conflict with Ukraine. Consequently, western countries have imposed a series of sanctions against Moscow, which has retaliated with counter-sanctions of its own. Both are taking a toll on its economy.

The IMF also urged Russia's Central Bank to tighten its monetary policy to anchor inflation expectations. It expects inflation this year to come above 8 percent.

"The monetary policy is very important to keep inflation on target and it is important to anchor inflation expectations," Spilimbergo said.

The Central Bank has an inflation target for next year of 4.5 percent, plus/minus 1.5 percentage point.

Spilimbergo urged the Central Bank to raise rates and keep them positive in real terms, above inflation.

"Our recommendation is for a tighter monetary policy stance and at the same time defend the credibility of the Central Bank," he said.

At last month's rate-decision meeting, the Central Bank kept rates unchanged, leaving its key rate, the one-week minimum auction repo rate, at 8 percent.

Spilimbergo also said the IMF supports the Central Bank's stance against restrictions on cross-border capital movement.

"The position of the Central Bank of Russia is against capital controls," he said. "We agree with this assessment. In the present time, they would be not helpful and we do not recommend them."

… we have a small favor to ask.

As you may have heard, The Moscow Times, an independent news source for over 30 years, has been unjustly branded as a "foreign agent" by the Russian government. This blatant attempt to silence our voice is a direct assault on the integrity of journalism and the values we hold dear.

We, the journalists of The Moscow Times, refuse to be silenced. Our commitment to providing accurate and unbiased reporting on Russia remains unshaken. But we need your help to continue our critical mission.

Your support, no matter how small, makes a world of difference. If you can, please support us monthly starting from just 2. It's quick to set up, and you can be confident that you're making a significant impact every month by supporting open, independent journalism. Thank you.


Read more