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04 May 2016, Annie Tsoneva, EMIS Editor

EC makes grimmer forecast for Russia’s 2016 GDP decline

The European Commission revised its forecast for Russia’s 2016 gross domestic product (GDP) decline for 2016 and worsened it to 1.9% from 1.2%, newswire Prime reported on Wednesday citing the commission's Spring 2016 Economic Forecast.

However, Brussels improved its projection for Russia’s economic recovery next year to 0.5% from 0.3%.

“Downside risks to the outlook are related to a possible prolongation of sanctions throughout 2017, which would worsen economic confidence and a further delay investment recovery," according to the forecast.

Russia’s inflation rate is seen at 7.5% for 2016, down from 8.5% in the previous EC forecast.

The main factors for the Russian economy will be the geopolitical situation, low oil prices and the central bank's monetary policy.

Russia’s economy contracted 3.7% last year due to the western sanctions and low oil prices.

Kremlin expects a 0.2% decline in GDP for this year and a 0.8% growth next year.

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