A new report published by the World Bank predicts that capital outflow from Russia will ascend to $113 billion in 2015 and $82 billion in 2016. The report also lowered its forecast for the decline in Russian GDP in 2015 and 2016. The bank now believes that the Russian economy will retract by 3.8 percent in lieu of the previously forecast 2.7 percent in 2015 and by 0.7 percent in 2016. In 2017 the bank expects the Russian economy to begin to grow again, but only by 1.5 percent.

The bank cites a number of economic conditions as the causes for the revisions. The lack of diversity in the Russian economy was for instance referenced by the bank as a contributing factor as well as the continuance of a slump in global commodity prices. The impact of these factors, according to the bank, will be felt most acutely in “lower-income households.” Generalized poverty is also expected to “increase sharply.” Other ancillary factors cited by the bank are high costs of foreign borrowing and “limited access to international financial markets” due to economic sanctions.

Follow us on Twitter: @SteppeDispatch

News Briefs:

• Kazakh state oil and gas firm KazMunaiGas announced that it will sell half of its share in the massive Kashagan oilfield to Kazakh sovereign wealth fund Samruk-Kazyna. The sale, valued at $4.7 billion, comes as the result of consistent delays and technical problems related to the oilfield. Production on the field has been perceived as largely unsustainable now given its significant budget and the low price of commodities. However, Kazakh energy analysts estimate that production on the plant could resume in late 2016 or early 2017.

• Shell is in negotiations with Russian state-controlled energy giant Gazprom in relation to offshore gas fields near Russia-controlled Pacific island Sakhalin. The US treasury`s latest round of sanctions restricts exports, re-exports and transfers of technology and equipment to the Yuznhno-Kirinskoye gas field located there, although talks between the two energy majors have been allowed to proceed.

• Pakistani Prime Minister Nawaz Sharif has called for renewed cooperation and collaboration in the troubled Indian region of Kashmir during his address to the United Nations earlier this week. Sharif has urged for Kashmiri rebels backed by Pakistan and Indian authorities to settle differences and “address causes of tension” in order to avert escalation. The pitch for Kashmir was part of a broader four-point peace initiative that includes the proposition that a “complete cease-fire on the Line of Control of Kashmir” be honored.

• The European Bank for Reconstruction and Development has allocated $300 million to Ukrainian natural gas provider Naftogaz Ukrainy to buy European natural gas. Following the loan’s announcement the EBRD stated that it is expected to bolster Ukraine’s energy security by allowing it to diversify away from Russian natural gas. The loan has reportedly been conditioned on greater transparency and reform within key sectors. Naftogaz will, for instance, be obligated to purchase natural gas “in line with best European practice.” The emphasis on transparency is a key tenant of the EU’s strategy for Ukrainian energy, according to a recent article published on Beyondbrics.

• Russia will ban incoming Ukrainian air traffic in reprisal for a ban implemented by Ukraine last week on Russian air traffic. The ban, announced by Russian Prime Minister Dmitri Medvedev, will take effect in October 25. Ukraine’s ban on Russian air traffic is “aimed at punishing Russia” for its alleged involvement in eastern Ukraine.