Macroeconomic Forecast Russia

June 2006 | Macroeconomic Forecasts

BMI View: As of this month, BMI is including corporate debt in its external debt forecasts; while sovereign indebtedness is plummeting, the corporate and banking sectors seem set to continue upping their foreign currency borrowings, albeit at a slower pace. We are unlikely to see an expansion at the 54% clip seen in 2005, but even if credit growth slows to the 28% we foresee for this year, this is still rapid. By the end of this decade, we forecast Russian non-sovereign external debt rising from the US$187bn recorded in 2005 to US$335bn. This is not likely to cause a major problem for Russian macroeconomic stability, though. Not only has the strong growth in corporate international borrowing been offset in recent years by government debt buybacks, but even with only limited sovereign repayments after this year, we expect total debt as a percentage of GDP to decline. Debt as a percentage of exports is also set to remain roughly stable.

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