Sanctions no obstacle: the Russian economy will be 2% growth in 2018

© Fotolia / psdesign1ИмпульсSanctions no obstacle: the Russian economy will be 2% growth in 2018© Fotolia / psdesign1

The economy of the country was under the powerful pressure of several rounds of us sanctions, but this does not prevent it to grow. At the end of the year Russia’s GDP will increase by two percent, with such a forecast made by the international rating Agency Fitch. Why external constraints is not able to bring down the economy with an upward trajectory and which sectors are pulling it up in the material RIA Novosti.

Fulcrum

An updated macroeconomic forecast from the US-based Fitch rating Agency pleased: instead of growth of 1.8%, the Russian economy will show this year to two percent. In 2019 the rate will slow to 1.5%, but in 2020, again, is expected to accelerate to 1.9%.

Prognosis with good reason: a number of key parameters clearly indicate the economy’s resilience to external shocks, including sanctions. First and foremost, the support of a budget surplus and low external debt.

This year, Federal budget of Russia will be executed without a deficit for the first time in seven years. The Ministry of Finance estimates that revenues will exceed expenses by more than half a trillion rubles. This means that the need for borrowing country, in fact, not experiencing.

The debt load is minimal. The total external debt now of $ 485 billion, of which only about 15% comes from the state. This is one of the lowest in the world. Little debt and the possibility of its quick repayment reduces the state dependence on external financial flows.

Risks for banks

Analysts pointed to the risks — primarily to the financial system. Condition of banks is characterized as stable, but Fitch see a certain threat in the same sanctions as assets and the possible overheating of the credit market. And most importantly — the price of oil. The problems begin at a price of $ 58 per barrel and a drop in prices below $ 40 per barrel is able to provoke another economic crisis, noted in Fitch.

No reason why oil prices retrace to such levels is not observed, on the contrary — the market is waiting for SuperStack.

The geopolitical situation is pushing up oil prices to five-year highs. The market faces a supply shortage — due to sanctions the US with it’s drop of Iranian crude by more than two million barrels per day, and to compensate for this, most producers can not afford, except perhaps that of Russia and Saudi Arabia.

However, it is not only in short supply.© RIA Novosti / Natalia to Seliverstova in fotobanka percent in the windowSanctions no obstacle: the Russian economy will be 2% growth in 2018© RIA Novosti / Natalia to Seliverstova in fotobanka percent on display

The cushion of reserves

As explained by analysts of the American investment company Sanford C. Bernstein & Co, in the medium term, the imbalance in the oil market will intensify — due to a substantial reduction of investment in exploration. Trying to overcome the collapse in prices in 2014, the largest oil company in the world has neconventionale, with 2000, proven reserves decreased by an average of 30 percent.

Thus, there were all conditions for take-off of prices: the rapid growth of demand with a shortage of inventory. And although the market still will not allow superhigh prices, the oil will lock in the region of 60-80 dollars per barrel. This forecast was voiced in July one of the largest investment banks of the world, and apparently it comes true.

The price of oil in this range is an absolute good for the budget. Now all oil and gas revenues (those that are above the established budget trims at 40.8 per barrel) are directed to the formation of national reserves. Almost pre-crisis level of reserves (goal is $ 500 billion) creates a solid airbag, and is an insurance policy in case oil prices will drop.© RIA Novosti / Maxim to Bogodeeva in photobacteria oilSanctions no obstacle: the Russian economy will be 2% growth in 2018© RIA Novosti / Maxim to Bogodeeva in photobacteria oil
Sector growth

The fact that the economy is functioning and growing, despite the slow pace of recovery growth indicate fundamental indicators in a number of key real sectors — agriculture, arms production, chemical industry, transport engineering. They all show a positive trend.

So, four of the five major economic sectors — agriculture, retail trade, sphere of paid services and the industry in the first half rose more than two percent. This is stated in the review of the Institute for complex strategic studies.

The decline is observed only in the construction industry, but if in the past year recorded a decrease of 3.4%, only one percentage point.

Sanctions, of course, slowed the growth of the economy, but did not affect the rating of Russia. In August, Fitch ratings confirmed long-term credit rating in foreign and national currency at level «BBB-» with a positive Outlook. The performance of most developing countries at the moment worse.

«The Russian rating reflects the combination of a strong balance sheet, robust external financing and stable macroeconomic policy», — was noted by the international experts.

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