MOSCOW, July 9 (Reuters) – The Russian economy ministry has raised its outlook for economic growth and oil prices in 2021 and now envisages a stronger rouble, and it has also raised this year’s inflation forecast, the ministry’s interim set of forecasts showed on Friday.
After shrinking 3% in 2020, its sharpest contraction in 11 years, the Russian economy has been on the mend thanks to a rebound in consumer demand and high prices for oil, its key export, prompting a series of upgrades to its economic outlook.
The economy ministry revised its 2021 outlook for gross domestic product growth to 3.8% from 2.9% it predicted in its previous set of forecasts in April.
“We see the economy is recovering faster than we had expected… Our experts say the economic recovery potential is not exhausted yet,” an economy ministry official said.
The ministry raised the 2021 capital investment growth forecast to 4.5% from 3.3%, while upgrading its view on an average price of a barrel of Russia’s Urals crude to $65.9 from $60.3 URL-E.
The economy ministry also lifted its 2021 consumer inflation forecast to 5% from 4.3%.
Stubbornly high inflation was behind the central bank’s decision to raise rates three times this year.
Inflation, the bank’s main area of responsibility, overshot the 4% target in late 2020 and reached 6.5% in June, its highest since August 2016.
The central bank is now widely expected to raise its key rate again from 5.5% on July 23.
The economy ministry also revised its average rouble rate forecast for this year to 72.8 against the dollar from 73.3 seen in April. This envisages the rouble appreciating from levels of around 75 seen on Thursday.
“We all realise that the rouble price should be different at oil prices of $75 per barrel,” the ministry’s official said, blaming the current rouble weakness on sanction risks and uncertainty around the OPEC+ deal on global oil output. (Reporting by Darya Korsunskaya; Writing by Andrey Ostroukh; Editing by Hugh Lawson)