Better than yesterday: six reasons for economic optimism in 2017

Better than yesterday: six reasons for economic optimism in 2017© Fotolia/ olly

MOSCOW, 30 Jul — RIA Novosti, Natalia Dembinski. In 2016 the Russians, it seems, had lost its former optimism — only a third (33%) believe that the new 2017 will be better than the outgoing. In 2015 and be optimistic in the next year more than half of Russian citizens (54%). The index of the optimism of the Russians from 32 points down to 14 points, stated analysts of research holding «ROMIR».

Such sentiments are not surprising: more than 40% of Russian citizens associate the outgoing year with the difficult economic situation. The Russians plunged into the gloom of rising prices and falling incomes.

However, by the end of the year, the economy showed signs of recovery, and a number of changes clearly indicate that the situation is improving. Let’s see what indicators give us hope for the best.

The reduction of inflation

In 2015, inflation in Russia made a sharp jump to 12.9% for the year, which was the maximum since 2008. Especially rapidly growing food prices: compared to last year, they rose by more than 19%.

In 2016, the Central Bank called the reduction of inflation as its main task. And the first results seem to already have.

For the first half of 2016, the growth rate of consumer prices slowed down to 7.3%. By the end of 2017, inflation is expected to reach 4%. The purpose of the Central Bank was put back in 2013, and initially believe in it with difficulty. Now it seems achievable.

Pre-crisis interest rates on loans

The fact that the Russian economy is emerging from hibernation, the Central Bank responded in September lowered its key rate by 0.5 percentage points to 10% per annum, explaining his decision to reduce inflation.

Banks immediately responded to the signal controller, starting to cut rates on consumer loans. And in December, the average mortgage rate in Russia returned to pre-crisis levels -12,7% per annum (by the end of 2015, the average mortgage rate was 13.4%).

The revival of the industry and business activity

Another important factor indicating that in the Russian economy went smoothly – the growth of industrial production.

For the period from January to November this year, it was 0.8 % compared to the same period last year. The figure is twice exceeded the forecasts of experts. By the end of 2016 the growth of industrial production in Russia might exceed 0.5%, said the Ministry.

More good news — the Index of business activity (PMI) in the services sector of Russia in December of this year increased to 56.5 points – to 49-month high. A figure below 50 reflects a decline in activity, as higher – growth.
The stability of the ruble

The Russian currency in the last months of the year showed stability miracles. In December 2014, the ruble’s collapse was spectacular, the last year the currency has also completed the fall, although not as strong. Now the ruble is trading near yearly highs.

Grown oil

Observers feared: oil prices could collapse to $40 or even $35 per barrel.

But OPEC’s decision to freeze production dramatically pushed the price up to $51 per barrel, and the deal outside the cartel of oil producing countries to cut production sent them to new heights.

30 December, the price of a barrel of Brent rose above $57, setting a record for the last six months.

GDP growth

At the end of October, analysts from leading international rating agencies, said: in Russia ended. Last year, GDP Bloomberg analysts estimated at 3.7%.

This year the decline will be much less noticeable — do you think polled by analysts — at the level of 0.6%. In 2017, the consensus of economists predicted an increase of 1.3%.Better than yesterday: six reasons for economic optimism in 2017Recession or recovery

Similar forecast was voiced and the Ministry. According to the calculations Department, the economic downturn in Russia for the year will be 0.5%.

Next year GDP growth may be twice as large as the official forecast of 0.6%.

The head of the Central Bank Elvira Nabiullina has not excluded that the economy will «raise» of 1%, noting that this year will be the completion of the adjustment of the economy to external challenges.

The IGN experts have confirmed that in 2016 the economy has shown an enviable stability and a high degree of adaptation to external shocks. And the GDP is recovering faster than expected pace. All the prerequisites for release of stress is, and how, and how fast the economy will come out of it — will show the coming year.