Even if oil reaches $100 a barrel and ruble remains relatively cheap (RUR 65 = $1), the Russian economy will grow only by 2.1% in 2019, according to a report by Bank of America Merrill Lynch, RBC reports.
Therefore, even in the most favorable circumstances, the Russian economic growth will be insignificantly better than the regular forecast of 1.8% by the International Monetary Fund.
Bank of America argues that the Russian economic growth will not exceed 1.8% if the exchange rate if RUR 60 per $1 or lower. In this case, not even $100 p/b will help our economy. Notably, a higher ruble negatively affects exporters and weakens the economic growth.
Currently, ‘black gold’ costs around $60 per barrel. However, Bank of America experts believe that next year the price will increase to $70.
“We believe oil prices will resume their path back up to $70 average next year, potentially higher in the second quarter for a brief spell of time. We believe the (OPEC) cuts were sufficient,” Hootan Yazhari, head of global frontier markets equity research at Bank of America Merrill Lynch, commented.