World Bank cut its forecast for Russia

The World Bank halved its forecast for 2009 of Russia economic growth yesterday as the global financial crisis push oil prices down and companies cut its investment. The latest official data released on November 12 showed that the country’s currency reserve has drained by about 20%. The Russia Central Bank has defended ruble by $57.5 billion in the period September and October. The Current foreign reserve consists of 45% in USD, 44% in Euro, 10% in GBP and 1% in JPY.

The Russian Economic Boom has been halted by dropping oil prices and foreign capital flight.

The Bank forecast that inflation will reach 13.5% this year because of $200 billion stimulus package, so the 11.8% of inflation target cannot be reached. The package is aimed to bolster banks, retailers and construction companies. The Fundamental of current macroeconomics will cause weakening ruble in the short term. But gold and foreign currency reserve should provide an adequate cushion for the economy even though the reserve fell.

The Banks expected the economy will grow 6% this year and 3% in the next year.

ETFs/Stocks :

Market Vector Russia ETF Trust  (RSX)

Related Posts :

Russia will likely face a very hard landing

Sources :

The International Herald Tribune: World Bank halves Russian growth forecast for 2009, November 18, 2008

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