IMF Cuts Russia Growth Forecast to 7%

Russian economic growth will slow more than expected because the world faces "the most dangerous financial shock" for developed markets since the 1930s, the International Monetary Fund said Wednesday.

Gross domestic product will probably expand 7 percent this year and 5.5 percent in 2009, the Washington-based IMF said in its World Economic Outlook released today. That is less than a July estimate for 2008 growth of 7.7 percent and a 2009 expansion of 7.3 percent.

"Growth is set to weaken appreciably, reflecting slowing world demand and tightening financial conditions," the IMF report said. "As investors' appetite for risk declined, pressures extended to emerging markets, particularly to Russia, which faced a confluence of shocks."

The IMF's growth forecast for 2008 reflects Russia's "stronger-than-expected performance early in the year, rising terms-of-trade gains, and a larger-than-expected fiscal stimulus package," the report said. "However, growth prospects are deteriorating as the region has been affected by the global financial turmoil."