Macroeconomic Forecast Russia

BMI has adjusted several of its forecasts, most notably in relation to the current account and external debt. Although the current account surplus came in slightly lower than we expected in 2005, at 12.2% of GDP versus our 13.3% estimate, this was nevertheless an extremely robust performance, driven, in the absence of strong oil export volume growth, by last year's sharp rise in the price of oil. BMI's oil price forecasts, which see Urals crude averaging US$50.80/bbl in 2006 and US$49.50/bbl in 2007, from around US$50.20/bbl in 2005, suggest that the current account will continue to be supported over the coming two years by favourable prices, even as real oil export growth slows on the back of output and transport constraints (with the recent extremely cold weather in Russia having added a further short-term downside risk to export volumes). We have raised our forecast for the 2006 current account surplus to 9.4% of GDP from 8.6%, and to 6.6% in 2007 from 4.9%. Meanwhile, after federal foreign debt was reported at US$86.8bn at end-September, BMI sees debt falling to just US$75bn, or 9% of GDP, by end-2006, in the expectation of further repayments to the Paris Club of sovereign creditors.

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