Boston, MA -- (SBWIRE) -- 09/11/2014 -- Core Views:

- The fallout from the Ukraine crisis has worsened the domestic demand outlook in Russia, and we expect real GDP growth to slow to 0.6% y-o-y in 2014, from 1.3% in 2013. With the government taking steps towards fiscal consolidation, net exports will be the main driver of growth in 2014-2015.

- Although inflation spiked to 7.8% y-o-y in June, up from 6.1% y-o-y in January, we reiterate our view that inflation will subside by year-end. Subsiding inflationary pressures will allow the Central Bank of Russia to cut the main policy rate from 8.00% to 7.75% in Q115.

- Rouble weakness will benefit Russia's public finances in 2014-2015, ensuring Russia's budget deficit will remain modest over this time frame. In addition, the government has recently announced plans aimed at fiscal consolidation, which we believe are credible, further bolstering Russia's fiscal accounts outlook over this forecast period.

Major Forecast Changes:

- We have recently revised down our forecast for real GDP growth in Russia for 2014 and 2015 as the fallout from the Ukraine crisis has dampened the outlook for domestic demand to a greater degree than we had previously anticipated. We expect real GDP growth to slow to 0.6% y-o-y in 2014, from 1.3% in 2013. With the government taking steps towards fiscal consolidation, net exports will be the main driver of growth in 2014-2015.

- Recent developments in Russia have prompted us to slightly modify our forecast for the monetary policy trajectory this year - whereas before we expected a 25 basis points (bps) cut to the Central Bank of Russia's benchmark interest rate by year-end, now this view is likely to materialise in Q115. The CBR governorship appears to be more politically independent and inflation expectations more pronounced than we previously expected.

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Risk To Outlook:

The retaliatory food export bans imposed by Russia on trade partners in the EU and the US, among others, have presented an upside risk to our inflation and...

The Russia Business Forecast Report helps businesses with market assessment, strategic planning and decision making to promote growth and profitability in Russia and is an essential tool for CEOs, Chairmen, Finance Directors/CFOs, Managing Directors, Marketing/Sales Directors with commercial interests in this emerging market.

An influential new analysis of Russia's economic, political and financial prospects through end-2017, just published by award-winning forecasters, Business Monitor International (BMI).

Key Uses:

- Forecast the pace and stability of Russia's economic and industry growth through end-2017.

- Identify and evaluate adverse political and economic trends, to facilitate risk mitigation.

- Assess the critical shortcomings of the business environment that pose hidden barriers and costs to corporate profitability.

- Contextualise Russia's country risks against regional peers using BMI's country comparative Risk Rankings system.

- Evaluate external threats to doing business in Russia, including currency volatility, the commodity price boom and protectionist policies.

Economic Outlook:

How will the Russia economic policy-making and performance impact on corporate profitability over 2013-2017?

BMI provides our fully independent 5-year forecasts for Russia through end-2017 for more than 50 economic and key industry indicators. We evaluate growth, and also forecast the impact of economic management.

Economic Outlook Contents:

The Russia Business Forecast Report features BMI's forecasts with supporting analysis for 2013 through to end-2017, set against government views and BMI's evaluation of global and regional prospects.

Key Areas Covered:

Data:

- Full 10-year forecasts with data - for key macroeconomic variables including GDP (real growth and per capita), population, inflation, current account balance and the exchange rate.

- BMI's comprehensive Risk Rankings system - rates each country worldwide for economic and political risk, and rates the business environment, within a global and regional context.

Written Analysis:

- Economic Activity - real GDP growth, employment, inflation, consumption (retail sales and confidence).

- Balance of Payments - trade and investment, current and capital account.

- Monetary Policy - interest rate trends (bank lending and deposit rates) and inflation (producer price and consumer price).

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