EBRD cuts growth forecast for Russian economy

PanARMENIAN.Net - The European Bank for Reconstruction and Development (EBRD) has cut its growth forecast for the Russian economy from 4.2 percent for 2012 to 3.1 percent, and from 4.3 percent to 3.3 percent for 2013, the bank said on Wednesday, July 25.

The outlook was as "the biggest downside risk for the whole [European] transition region remained a possible further deterioration of the eurozone crisis," the EBRD said in a statement, RIA Novosti reported.

The Russian Economic Development Ministry said in June it planned to raise the country's gross domestic product level growth to 3.8-4 percent this year from the current 3.4 percent.

"Substantially lower commodity prices [in Europe] in the [negative] scenario [for eurozone] would also cause a severe slowdown in Russia and other CIS commodity exporters. The weaker Russian economy would in turn seriously impact the non-commodity exporting countries of the CIS," the EBRD also said in its report.

"The probability of this downside scenario has reduced somewhat following the recent EU Summit decisions on 'more Europe' with the prospects of a banking union in the future, but remains substantial," it added.

This month the International Monetary Fund also cut its forecast for Russia’s 2013 GDP growth outlook from 4 to 3.9 percent, but left unchanged its 2012 economic growth at 4 percent.

In 2011 Russia’s gross domestic product grew by 4.2 percent, the world’s third highest growth rate among leading economies, according to the Economic Development Ministry.