Russia Business Forecast Report Q2 2013 - New Report Available

New Country Reports research report from Business Monitor International is now available from Fast Market Research

by Bill Thompson

(WireNews+Co) - Boston, MA - 14 March 2013

Core Views

We expect international relations between Russia and the US to remain under pressure this year as Russian domestic concerns prevent a significant improvement in ties in 2013. President Vladimir Putin continues to face strong public opposition at home and has gained significant political capital amidst his support base for his strong stance against the West, implying to us that the Kremlin's assertive stance is likely to persist this year.

We hold to our view that Russia's economic growth will slow to 3.4% in real GDP terms in 2013 as consumer spending slows and the global oil price falls from 2012 levels. However, we hold a cautiously optimistic view towards Russia's investment outlook ahead of a number of international sporting events and a drive to increase investment into the Far East of the country.

View Full Report Details (http://www.fastmr.com/prod/552239_russia_business_forecast_report_q2_2013.aspx?afid=201) (http://www.fastmr.com/prod/552239_russia_business_forecast_report_q2_2013.aspx?afid=201)

We forecast 25 basis points (bps) of cuts to Russia's policy rate in 2013, bringing it to 8.00% by year-end as growth slows. We expect the central bank to continue moving from an exchange rate targeting towards an inflation-targeting regime. We believe that the country's slowing growth outlook will prompt authorities to loosen monetary policy.

Major Forecast Changes

There have been no major forecast changes since our last quarterly report.

Key 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 another 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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