Capital Outflow from Russia in 2015 Expected to Reach $113 Billion

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.

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News Briefs:

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  • 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.
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