The market expectations contrast with official rhetoric: Economy Minister Maxim Oreshkin said this month the economy would grow by 2 percent in 2017. Only two banks polled by Reuters share Oreshkin's view. Others provided forecasts closer to the central bank's version - growth of 1 to 1.5 percent this year. The deviation in outlook could be a result of different methods of GDP growth assessment. Former Economy Minister German Gref said earlier this month the growth figure would depend on whom the Federal Statistics Service reports to. Growth is expected to be accompanied by a 2.0 percent increase in real wages, which should help retail sales to advance 1.4 percent, the poll showed.
The consensus view on year-end inflation stood unchanged at 4.2 percent, above the central bank's target of 4 percent. "A pick-up in consumer demand, observed over the past two months, and remaining risks of the rouble weakening mean there are risks of higher inflation in the second half of the year," said Dmitry Dolgin, macro strategist at Gazprombank.
Still, year-end inflation at 4.2 percent would be a record low for Russia, leaving room for rate cuts, needed to prop up economic recovery. The Russian central bank is expected to cut interest rates on Friday by at 25 percent points, which would bring the key rate to 9.5 percent. The Reuters poll showed the key rate might be lowered to 8.5 percent by the end of the year.
In the short term, monetary easing is likely to boost the rouble by propping up demand for rouble-denominated treasury bonds, known as OFZs, as their prices will increase if the central bank proceeds with rate cuts. In the longer term, however, lower interest rates may deprive the rouble of its status as a high-yielding currency. The rouble is seen at 61 to the dollar, compared with Tuesday's level of 56.03, one year from now, the poll showed.
Copyright Reuters, 2017