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Russia’s Duma set to approve 2018 Budget as economic conditions improve


Russia’s Duma set to approve 2018 Budget as economic conditions improve

A statue of a Russian bear
A statue of a Russian bear
Photo: Yuri Smityuk/Getty

Today Russia’s parliament will consider the 2018 budget, which is expected to reduce the country’s deficit by 0.6% to 1.5% of GDP.

The shrinking budget deficit is the latest in a string of positive indicators for the struggling Russian economy, which started slowly growing in the last three months of 2015 after two years of recession. The 2.5% growth registered last quarter was Russia’s best in years.

Last week, Fitch revised its outlook on Russia’s sovereign credit to “positive” and signalled they would likely upgrade their credit rating to BBB, making Russia more attractive to foreign investment.

However, Russia faces the same challenges that caused a recession in 2014. Oil prices have increased modestly but remain stuck under $60 a barrel. Moscow had hoped the Trump administration would loosen American sanctions targeting its financial elite and energy sector. However, legislation passed in July redoubled measures while restricting Trump’s ability to alter them without congressional approval.

Even with these persistent challenges, the World Bank estimates Russia will experience modest 1.5-2% growth for the next several years. After showing it can weather Western economic backlash to its military adventurism, Russia looks set to remain a significant power in Eurasian politics.

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