World Bank: Sanctions and oil damage Russian economy

Credit: RIAN

The World Bank revealed major reasons for the Russian economy’s slowdown and once again updated the forecast for Russia to negative growth. This is the fourth decline recorded this year. 

According to the statistics of this international organization, Russia’s GDP will increase by only 1% as of the end of 2019. Last January, World Bank analysts predicted 1.5%. In April they lowered their expectations to 1.4% and, later in June, to 1.2%. A slower growth is also expected next year as the forecast was scaled down from 1.8% to 1.7%. The prognosis for 2021 remains at 1.8%. 

The experts believe that the Russian economy is being stalled by the sanctions, lack of investment, the VAT increase and the resulting decline in sales. Two other negative factors that emerged this year include the restrictions imposed on oil production by OPEC and the damage caused by the oil product contamination in the Druzhba pipeline. World Bank analysts note that the lack of any significant economic growth in Russia will seriously hit neighboring states as well, including Ukraine, Kyrgyzstan, Tajikistan and Moldova.

Negative trends are also present in the global economy. The World Bank has lowered its forecast for the global GDP from 2.6% to 2.5%.

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