No Dramatic Changes for Worse Expected in 2016

30 december 2015 | OTR

Leonid Grigoriev, the expert of the Analytical Center, commented on the economic results of the year on air in De-Facto program on 'Obshchestvennoe Televidenie Rossii - OTR' (Public Television of Russia - PTR).

Leonid Grigoriev
Leonid Grigoriev
Chief Adviser to Head of the Analytical Center

'Up to December we had been hoping that economy would regain momentum in 2016 and show positive growth figures, but the oil events spoild the forecast,' Mr. Grigoriev says. 'I think the main thing to do this year will be to wait patiently. Yet no dramatic changes for the worse are to be expected.' The expert recalled, that in 2015, oil prices dropped almost twice, which cost the country about 125 million dollars in exports. 'It is a tremendous shock, which no country can pass unnoticed. And the situation is bad in all oil exporting countries — Norway, Saudi Arabia... But economists believe that oil must cost more,' comments Leonid Grigoriev.

The expert notes that oil surplus in the market is not large. In 2014, the surplus was less than one million barrels, i.e. less than 1 %, and in 2015, it amounted to 1.2 %. According to the International Energy Agency, oil prices will reach 80 dollars. All experts believe that prices will bounce back, Mr. Grigoriev sums up.

As far as capital investment by large companies is concerned, last year it fell by 20 %, but there is a cushion there as yet. Of course, it will be thinning down, and some projects will be stopping. 2016 will be a continuation of 2015, so there will be no economic growth, Mr. Grigoriev believes.

In the expert’s opinion, in this situation the important thing is how the country is coping with adjustment, how it reallocates its resources. 'A lot of work was done this year to reallocate the budget, and naturally, the whole country now needs to adjust to the new situation,' he says. The expert’s advice is to ‘use head and hands’ to earn money. 'Modernization had to start back in the early 2000s, when we had low oil prices,' Mr. Grigoriev is convinced. 'Every crisis pushed us back a mile, and now we find ourselves in a weird position — we have territory, resources, people, and money, yet we do not produce preferring to import from abroad and export our oil.'

See more in De-Facto program.