April 18 (UPI): The Russian economy is on the slow path to recovery as it rebounds from the shock triggered by the collapse in crude oil prices, the head of the IMF said.
Russia’s economy lingered in recession last year and the national currency, the ruble, declined in value after crude oil prices dipped below $30 per barrel. Oil prices have been fluid this year, trading in a range of around $45 per barrel to $55 per barrel, still about half the price from three years ago.
Christine Lagarde, the managing director of the International Monetary Fund, told Russian news agency Tass the response from Moscow to the economic shock of lower crude oil prices was “very comprehensive.”
“They adopted a very good monetary policy, which included the floating of the currency, making sure that the financial sector was stable,” she said. “And that helped the country move from a very difficult crisis, with oil prices divided by four, and the sanctions that applied as a result of the invasion of Crimea [in 2014].”
The Russian Central Bank in March lowered its key lending rate by a quarter percent to 9.75 percent per year, the first cut since September. In a statement justifying the move, the bank’s board of directors said inflationary expectations are lower, though recovery is emerging.
Central Bank Gov. Elvira Nabiullina said the Russian economy stands to exhibit growth this year. The number of economic sectors expected to expand this year is not much greater than those in contraction, but losers are outnumbered. Much of the strength depends on the price of crude oil, however.
The economy will be on the positive side of growth, she said, provided oil stays above $40 per barrel. The price for Brent crude oil, the global benchmark, was around $55 per barrel early Tuesday.
All major crude oil benchmarks lost value in March, though the downturn for Urals crude, the Russian benchmark, compared with a 6.2 percent decline for Brent crude oil.
By Lagarde’s read, with crude oil prices holding steady, the Russian economy is going to be in positive territory for 2017.