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IMF sees 3.4% growth in Russia, zero in Ukraine

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(GlobalPost/GlobalPost)

Economic growth in Russia will stay steady at 3.4 percent in 2013 but be zero in its struggling ex-Soviet neighbour Ukraine, the International Monetary Fund said on Tuesday.

The Fund's World Economic Outlook predicted an overall rebound in the ex-Soviet nations of the Commonwealth of Independent States (CIS), seeing especially strong performance from commodities-rich Central Asia.

"Growth in the CIS is likely to pick up somewhat from its mediocre pace in 2012 as the external environment gradually improves and oil prices stabilise at high levels," the IMF said in its report.

"Growth will be stronger in the Caucasus and Central Asia than in the European CIS countries, underpinned by remittances and high commodity prices."

The IMF said Russia's performance will stay steady instead of improving "because the output gap is essentially closed and growth is running close to potential."

It added that it expected growth to reach 3.8 percent of gross domestic product in 2014, a number far more optimistic that Russia's own expectations.

The economy ministry in Moscow last week revised down its own 2013 growth outlook to 2.4 from 3.6 percent amid a slowdown in industrial output and consumer demand. A senior cabinet ministry later warned of the possibility of recession by the end of the year.

But in struggling Ukraine, the IMF forecast zero growth for this year compared to a 0.2 percent uptick for 2012, with an improvement to 2.8 percent seen in 2014.

It noted the "unchanged policies" on the part of the government in Kiev.

It said fellow commodity importer Belarus would reach 2.1 percent growth this year, continuing its cautious recovery from an economic crisis in 2011.

In the Central Asian powerhouse Kazakhstan, the IMF saw 5.5 percent growth this year, an improvement on a 5.0 percent figure last year that was hurt by a "temporary" decline in oil output.

The IMF said it expected inflation to reach 6.8 percent across the region, hitting 6.9 percent in Russia and 0.5 percent in Ukraine, which also just avoided deflation last year.

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http://www.globalpost.com/dispatch/news/afp/130416/imf-sees-34-growth-russia-zero-ukraine