World Bank warns of impending economic crisis in Russia

The World Bank is warning Russia that it will face another economic crisis as early as 2012 if the current global slowdown does not reverse.

The organization has cut Russia’s GDP growth forecast from 4.4 to 4.0 percent in 2011. GDP growth for 2012 is estimated at 3.8 percent.

The main reason for the downturn could be lower demand for oil; it is expected that oil prices will fall to $80 by 2012. As the world’s largest energy exporter, Russia will acutely feel the consequences.

Among other reasons are “downside risks to global growth and commodity prices” which have risen sharply since August, as well as “the impact of external conditions on domestic demand.”

The World Bank cut growth forecasts for Russia on Thursday. The bank said that it was cutting Russia’s GDP growth prognosis based on lower commodity prices and increased global uncertainty.

Economists, however, do not say Russian economy’s prospects in the near future are particularly gloomy.

“This could put Russia in a far stronger fiscal situation,” Zeljko Bogetic, the World Bank’s lead economist for Russia, told RT. “It will be able to respond much more powerfully to new shocks.”

“Everything in Russia depends ultimately on oil prices,” Yaroslav Lissovolik, chief economist at Deutsche Bank Russia, told RT. “Currently oil prices are relatively high, despite the global turmoil and nervousness in the financial market. This is a very comfortable spot for Russia in terms of budget. We’re quite some way from the abyss.”

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