Russia Business Forecast Report Q1 2013: New Research Report Available At Fast Market Research

New Country Reports market report from Business Monitor International: "Russia Business Forecast Report Q1 2013"

by Bill Thompson

(WireNews+Co) - Boston, MA - 07 January 2013

Core View

We continue to expect President Vladimir Putin's United Russia party to maintain a firm grip on power over the coming years, with regional and local election results affirming our view. However, continual infighting between competing clans in the Duma, crackdowns on civil society and slowing economic growth are likely to keep public dissatisfaction with the administration high. Moreover, we believe the outcomes of pension and utilities reforms will be a clear indicator of the direction Putin is steering the Russian economy.

Our below-consensus expectation for Russia's 2012 real GDP growth of 3.4% appears to be well placed, as leading indicators have point ed towards a further slowdown in economic growth. As a result of tightening monetary policy in the face of rising inflation, we now expect weaker domestic demand to weigh on economic growth in 2013.

Russia's current account surplus will gradually shrink over the course of our forecast period on the back of strong import growth and lower global energy prices. We caution, however, that these upward revisions come on the back of our more negative expectations for domestic demand rather than a particularly robust outlook for exports.

View Full Report Details (http://www.fastmr.com/prod/513930_russia_business_forecast_report_q1_2013.aspx) (http://www.fastmr.com/prod/513930_russia_business_forecast_report_q1_2013.aspx)

Major Forecast Changes

We have revised down our forecast for 2013 real GDP growth in Russia to 3.4% from 3.6% previously. This comes on the heels of a stark shift by the central bank towards monetary policy tightening, a bias we expect to remain intact over the coming months.

We now forecast the current account surplus at 4.6% of GDP in 2012, from a previous forecast of 4.4%, and have adjusted our 2013 forecast to 3.9%, up from 3.4% previously, as a result of weaker domestic demand in the first half of the year.

Risks To Outlook

Russia's economic outlook has become more uncertain on account of the ongoing crisis in its main export market, Europe. An escalation of the situation in the eurozone cannot be ruled out, and risk of a eurozone exit by a larger member, such as Italy or Spain, as well as a major shake-up to banking sector stability, would have serious repercussions for Russia. Not only would this see liquidity tighten domestically, but exports would end up getting hit more than our forecasts currently imply. The hard landing scenario we are calling for in China is the third main risk factor to our growth outlook for Russia. A sharp drop in demand and a concomitant decline in global commodity prices would force a more abrupt rebalancing of the Russian economy towards the non-energy sector, which could foster several years of very weak economic growth.

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