Russia’s economy was whacked with the double whammy of falling oil prices and Western sanctions, now into their 16th month. Third quarter GDP fell 4.1% from the same period last year, which is better than the 4.6% decline in the second quarter. Russia’s third quarter GDP also beat consensus forecasts.
BarCap analyst Daniel Hewitt said he was retaining his forecast of a 4% contraction in GDP this year, but said the recession will end next year providing global oil prices reverse current trends and start to increase. Despite Russian equity beating the MSCI Emerging Markets Index this year, few will want to chase Russian stocks on the way down if oil were to fall below $40 a barrel. January futures are dangerously close, at $43 per barrel. The market expects oil prices to remain relatively stable, rising no more than $10 a barrel over the next two years.
Russia’s parliament released their 2016 draft budget last month, but it is based on a dangerously high oil price of $50 per barrel next year .... http://www.forbes.com
