Russian economic growth hit 6-year high in 2018 despite sanctions – World Bank

Tightening Western economic sanctions and market pressure did not stop the Russian economy from reaching record growth last year, according to the World Bank report on global economic prospects.

In 2018, Russia saw the highest growth in six years of 2.3 percent, the World Bank says in its June 2019 publication “Global Economic Prospects: Heightened Tensions, Subdued Investment,” released on Tuesday.

Growth was driven by a rise in oil prices and increased revenues from net exports. Some one-off factors also supported the Russian economy, such as energy-related construction projects and the hosting of the World Cup, according to the report.

However, the analysts slashed the forecast for Russian GDP for 2019 to 1.2 percent due to a decrease in oil production, part of OPEC-sponsored output cuts aimed at boosting the oil market. Tighter monetary policy and an increase in VAT at the beginning of the year has also slowed the country’s growth, the World Bank believes.

The forecast for 2020 and 2021 is more positive, with the World Bank expecting Russian GDP to reach 1.8 percent and remain at this level in 2021.

Meanwhile, growth among advanced economies is set to slow in 2019, while global economic growth is to drop to 2.6 percent, 0.3 points below previous World Bank forecasts. For instance, US economic growth is expected to stand at 2.5 percent this year, but may decelerate to 1.7 and 1.5 percent in 2020 and 2021 correspondingly.

“Current economic momentum remains weak, while heightened debt levels and subdued investment growth in developing economies are holding countries back from achieving their potential,” said World Bank group president David Malpass. He called on the countries to make significant structural reforms that improve the business climate and attract investment.

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