Russian Government predicts prolonged recession

RUSSIA / FSU POLITICS - In Brief 09 Apr 2020 by Alex Teddy
On April 6 RBK published a summary of the Kremlin's two stress testes that it has developed to estimate the financial robustness of 646 firms which the government considers strategically important. The rosier of the two scenarios says that the quarantine will last into June 2020 and Urals oil will stay at USD 20 till the end of 2020. Inflation would hit 4.5% and the RUB would fall to 80 to the USD. In the darker forecast quarantine lasts till September 2020. Urals oil falls to USD 10 per barrel into Q3 2020. Inflation rises to 5.5% and the RUB hits 89 to the USD. Economists broadly agree that these are both credible scenarios. Some have forecast a two year recession. The economy would shrink anything from 2.5% to as little as 08.%. That is taking into account the stimulus package. The package is worth just 1.3% of GDP. Western countries have announced packages of up to 10% of GDP. These predictions came before the OPEC+ agreement on April 9. A production cut seems likely. This would raise the oil price and thereby support the RUB.

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