Negative 2016 Outlook in Russia

The outlook for the Russian economy remains dim, as it contracted 4.1% (y-o-y) in Q3, compared with -2.2% and -4.6% in Q1 and Q2, respectively. While the recession has not turned out to be as deep as first feared, ongoing volatility in the rouble reflects expectations of an extended period of difficulty. Recovery prospects have been hampered by low and volatile oil prices, which continue to weigh on the fiscal outlook through lower taxation. In addition, the EU has decided to extend sanctions against Russia (which were due to expire) until March 2016, in a bid to keep economic pressure on Moscow to adhere to the Minsk cease-fire agreement with Ukraine.


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