Moscow: Oil at $60 a barrel may halt Russia's two-year economic expansion next year, triggering a "substantial" devaluation of the rouble, the Economy Ministry said, according to a document obtained by Bloomberg.
Gross domestic product may shrink as much as 1.4 per cent next year under a negative scenario that projects a "world recession" cutting the average price of Urals crude by almost a half from the current level, according to the report, submitted to the government for approval last week. The price of Urals, the nation's chief export oil blend, has averaged $109.35 this year and was at $114.23 Tuesday.
A reliance on raw materials, which President Dmitry Medvedev called "humiliating" and "primitive," has left the economy vulnerable to dropping global demand for its commodity exports. Russia's sovereign rating, which was last raised by Moody's Investors Service in 2008, is exposed to sudden changes in the price of oil, Fitch Ratings and Standard & Poor's said as they kept the credit grade unchanged in the past two weeks.
Under the government's base "moderate-optimistic" forecast, oil will average $108 this year, $100 in 2012 and $97 in 2013, supporting growth of 4.1 per cent this year, 3.7 per cent in 2012 and 4 per cent in 2013, Deputy Economy Minister Andrei Klepach said on August 27. The ministry previously expected growth of 4.2 per cent, 3.5 per cent and 4.2 per cent.
Svetlana Glikman, a spokeswoman for Economy Minister Elvira Nabiullina, confirmed that the document was last week submitted to the government's budget committee chaired by Prime Minister Vladimir Putin, where it was discussed Monday.
The US economy is "resembling a patient on a drip" and a default by a European Union member will create "systemic risks," leading to the "next profound crisis," Finance Minister Alexei Kudrin said in St. Petersburg on September 10.
Kudrin estimates the chances of "a second wave" of the global economic crisis at more than 25 per cent.
Russia, the world's biggest crude producer and largest energy exporter, needs higher oil prices than Saudi Arabia to balance its budget, Deutsche Bank AG estimated in June. Economic growth is lagging behind emerging-market rivals Brazil, India and China.
