Real GDP growth in Russia surpassedexpectations in 2018, reaching 2.3 percent, mostly due toone off effects of energy construction. Forecasted growth of1.2 percent in 2019 and 1.8 percent in 2020 and 2021reflects a more modest outlook. Russia’s macro-fiscalbuffers remain strong, with fiscal surpluses across alltiers of government and low public-debt levels. Whencompared to advanced economies, Russia spends less on healthand education. Rebalancing in favor of these categoriescould improve the overall efficiency of public spending.Short-term inflationary risks have abated, with the Bank ofRussia signaling a return to a neutral policy rate. Lendingactivity is recovering, but the banking sector remainsafflicted with high concentration and state dominance.Having eased slightly, the poverty rate remains in doubledigits with many households close to the poverty line andlacking formal employment. Informal employment is rising inthe face of close-to-zero net job creation by medium-sizedand large formal enterprises. Key risks to medium-termgrowth include the expansion of economic sanctions, renewedfinancial turmoil in EMDEs, a dramatic drop in oil prices,and souring of the global trade environment. The recentdouble-digit expansion in household credit may also pose arisk to financial stability in the case of a deteriorationin the macroeconomic environment.
PDF
download
878987797
028-85220240
