A senior Russian economic official has forecast a weaker ruble and slower growth, in what may be the first indication of an uphill battle at best for the country’s economy in the years ahead.
Deputy Economy Minister Andrei Klepach-perhaps best remembered by investors as the first government official to admit Russia would fall into recession during the 2008 financial crisis-sees the ruble falling 10% in the next three years. Many other indicators, like economic growth and industrial output, are also expected to deteriorate.
The culprits, Mr. Klepach says, are a mix of slowing global growth in combination with some uniquely Russian problems-mainly, a current account balance that’s expected to steadily worsen even as prices of oil, Russia’s chief export, will likely stay near today’s levels.
Mr. Klepach’s forecast is surprising because, just a month ago, he reaffirmed his view of a strong ruble and steady growth. It seems downright optimistic, however, when compared to an assessment by HSBC, which sees the ruble falling nearly 25% by 2014.
HSBC agrees in principal with the ministry’s projections, but thinks the economy will take a big hit, partly due to ongoing capital outflows. Some $30 billion has already left Russia already this year.
Imports will be growing faster than exports because “there is so much corruption and red tape that it will always be easier to import something into Russia than to make it here and try to sell it abroad,” said Alexander Morozov, chief economist at HSBC in Moscow.