Home Russia: Positive growth and stability but no supercharged rates – Wells Fargo
FXStreet News

Russia: Positive growth and stability but no supercharged rates – Wells Fargo

Analysts at Wells Fargo, believe Russian GDP growth will continue along at roughly a 2% pace for the foreseeable future.

Key Quotes:

“Economic growth strengthened in Russia in Q1, rising to 1.3 percent year over year from the 0.9 percent pace seen to end 2017. Real GDP growth has been positive on a year-over-year basis for more than a year now, one of many signs that macroeconomic stability is returning to Russia.”

“Consumer price inflation is down to a multi-decade low after skyrocketing a few years ago, and the central bank is in rate-cutting mode as pressure on the ruble has eased. Rising oil prices and a current account surplus also provide an encouraging near-term backdrop amid some emerging market volatility elsewhere in the world.”

“The long-run prospects for the Russian economy remain relatively dim. The working-age population is contracting, and slow growth in foreign direct investment (FDI) and gross fixed capital formation are not supportive of sustained capital deepening and accelerating labor productivity. With geopolitical tensions still elevated and sanctions continuing to weigh on the investment backdrop in Russia, we do not expect the Russian economy to return to the supercharged growth rates of the past anytime soon.”

“In the short run, sanctions placed on Russia will weigh on growth and investment, but the combination of higher oil prices, lower inflation, an easing central bank, a current account surplus and a relatively low external debt-to-GDP ratio should be enough to keep economic growth chugging along.”

“We believe Russian GDP growth will continue along at roughly a 2 percent pace for the foreseeable future.”

FX Street

FX Street

FXStreet is the leading independent portal dedicated to the Foreign Exchange (Forex) market. It was launched in 2000 and the portal has always been proud of their unyielding commitment to provide objective and unbiased information, to enable their users to take better and more confident decisions.