Russia needs to ensure its economy is braced for an oil shock in either positive or negative terms, a deputy at the International Monetary Fund said.
Russia is party to a joint agreement with the OPEC to trim output in an effort to balance a supply-side market that's putting negative pressure on crude oil prices.
David Lipton, a deputy director at the IMF, said in an interview with TASS that, given the uncertainty surrounding compliance with the agreement, economic planners at the Kremlin had to prepare for an either-or scenario. «The Russian economy is going to be affected by oil market developments for sure, and it's possible that positive shock of higher prices or negative shock of lower prices will happen, and I think that Russian economic policy has to be ready for both outcomes,» he was quoted as saying.
Dmitry Peskov, a spokesman of Vladimir Putin, told reporters last week that compliance from Russia was firm so far, though he offered no concrete support for his claims.
In its market report for December 2016, OPEC said it expected Russia to produce 11.1 million bpd this year, up about 500,000 bpd from 2016.
Russia's economy relies heavily on revenue from crude oil exports to the European and Asian markets.
Maxim Oreshkin, the economic development minister, said inflation was within guidance and growth this year would be about 1 % during the first half of the year, a rebound after oil-price related downturns last year.
David Lipton said the Russian economy would move modestly higher along with the rest of the world and it «makes sense,» for the country to aspire to robust growth on the back of an oil market recovery. «I think our forecast right now, 5-year growth forecast for Russia, which is based on present policy, have growth only averaging about 1.5 %,» he said. «So, we believe that for growth to be higher will require some policy change and some structural changes that will boost potential of the economy.»
Lipton said the global economy is on pace to grow about 3.4 % this year.