Russian government adjusts forecast for 2016. Decline, not growth

Russia's Economic Development Ministry has re-evaluated its economic outlook for 2016, according to the newspaper Vedomosti.

The ministry now estimates an average exchange rate of 68.2 rubles to the US dollar throughout 2016, gauging inflation at 8.5 percent.

The ministry predicts a 0.8 percent decline in GDP over the year. Previously, it had forecast a growth rate of 0.7 percent.

On an optimistic note, the Urals Crude Oil price is expected to reach $40 a barrel. Capital outflows, however, are expected to reach $50 billion.

This forecast data from the Economic Development Ministry may be used for finalizing the 2016 budget.

The ministry's calculations indicate that average Russians will continue to bear the brunt of the country's difficult economic situation.

In line with the ministry's readjustments, real wages are projected to decrease by 3.5 percent, average incomes are expected to decline by 4 percent, and total unemployment is estimated to rise to 6.3 percent.

Vedomosti

• On January 13, 2016, the Finance Ministry proposed a review of the 2016 budget in reaction to average annual oil prices of $40 a barrel.
• The original 2016 budget had been optimistically based on an average annual price of $50 per barrel. In January, the price of oil was following a downward trend approaching $30 a barrel.
• The government also plans to reduce expenditures by 10 percent.