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. Last Updated: 07/27/2016

Klepach Signals ’10 Optimism

The economy could grow by 3 percent or more next year, thanks to better than expected performance in recent months and higher oil prices, Deputy Economic Development Minister Andrei Klepach said Friday.

The comments broadly align with other recent forecasts, including by the World Bank and the European Bank for Reconstruction and Development, which last week predicted 2010 GDP gains of 3.2 percent and 3 percent, respectively.

The Russian economy emerged from its first recession in a decade in the third quarter, but is not expected to return to precrisis growth of more than 7 percent annually for at least a few more years. There are grounds for optimism, however, as Urals crude continues to trade nearly $20 per barrel higher than the $58 factored into next year’s budget.

“Now it looks like $68 to $70 for next year, but we will confirm the figure,” Klepach said, Interfax reported. “If the oil price is … around $68 to $70, then the increase [in gross domestic product] could surpass 3 percent. It could be 3.2 percent to 3.5 percent.”

Gazprom deputy chief executive Alexander Medvedev said Saturday that he expected that crude oil would trade between $75 and $85 per barrel next year, which he called a consensus forecast.

“We’re not hunting for skyrocketing prices,” he said. “We would like a fair and predictable price that will allow us to invest and to get a reasonable return on our investment.”

The Economic Development Ministry, which currently predicts 2010 growth to be 1.6 percent, is due to reveal its updated forecasts Dec. 1 and is expected to turn more optimistic. The ministry previously suggested that growth next year could reach 2 percent.

The State Statistics Service said Thursday that third-quarter GDP fell 8.9 percent, year on year, better than the ministry’s forecast of a 9.4 percent decline.

Analysts polled by Reuters expect the Russian economy to grow 3.1 percent next year after a contraction of 7.7 percent in 2009.

Klepach also told Interfax that inflation could reach 0.3 percent to 0.4 percent in November after three months of zero price growth.

(Reuters, Bloomberg, MT)