Economic Outlook until 2032 has determined Russia is a strange place

London Centre for studies in Economics and business (CEBR) has published its vision of the balance of forces in the world economy in the year 2032. London researchers give China 15 years to outpace the US in size of GDP. In 2032 China on this indicator will be headed by a ranking of the leading economies in the world. And what will happen to the Russian economy and the ruble?

Output in the first place — surely a remarkable achievement. Especially if to remember that for 70 years before that — in the early 1960-ies — China, seemed to completely dropped out of the civilizational rhythm, plunging into the abyss of barbarism first “great leap forward” and then the “cultural revolution”. He managed not just to come back — China has revealed a real long-lasting miracle. But still it is necessary to slightly damp the enthusiasm. Gross GDP is an important indicator, but per capita GDP China is still far behind dozens of countries. In 15 years not one China will demonstrate the sensation.

In the year 2032, the forecast СЕВR, the first ten countries in terms of GDP is as follows: China, USA, India, Japan, Germany, Brazil, UK, South Korea, France, Indonesia. India in 2018 will overtake the UK and France, finishing in fifth place in terms of GDP in dollar terms. And by 2027, India will move into third place, ahead of Germany.

The first ten countries in the world, therefore, equally share between today’s developed and developing. That is developing, as the name implies, it is well ahead of developed by the growth rate of the economy. However, certainly not all. CEBR does not share the hopes of Vladimir Putin that Russia will be able to settle the “top five countries” in terms of GDP, it is not in the top ten. But for 70 years before that the Soviet Union was ahead of the world at the most at that time, advanced space research…

Picture drawn 2032 CEBR, for Russia is disappointing. What happens in 2018?

The main thing that is encouraging: the world economy in General will grow. And not just to grow but to grow almost everywhere, such synchronicity was not since crisis of 2008. Grow and USA, as expected, at 2.5% and China by 6.6% and Russia — 1.5–2%, and the world economy on average by 3.7%. It’s bad enough that the pace of the Russian economy is not impressive, but the high growth rate of the world economy will ensure a high demand and the prices of Russian raw materials. In 2018, “the dynamics of commodity will be positive, and the main driver of this will be the growth of the world economy,” expects ThinkMarkets chief market analyst Naeem Aslam. He predicted that next year the oil will be traded in the range of $65-75 per barrel. These estimates seem to be many overpriced.

The energy information administration of U.S. Department of energy (EIA), for example, comes from the fact that the average price of a barrel of Brent crude oil in 2017 will be $53,88, and in 2018 — $57,26. These forecasts can not please the Russian Ministry of Finance: the budget includes significantly lower ($40 in 2017 and $40,8 — in 2018).

Well, if the oil will not fail, for the Russian budget, not too worried. What will happen to the ruble in 2018?

Most experts agree that, despite the oil support, the ruble will weaken. Additional currency risks contain, first, a counter-movement of interest rates by the fed, on the one hand, and the Bank of Russia on the other. This phenomenon has been called “divergence of the regulator”s policies”.

Second, the new American sanctions, the introduction of which is expected in early 2018, can be a blow to the ruble. If sanctions are imposed on investments into Russian OFZs, according to available estimates, at least $30-35 billion could leave the Russian debt market, and this is equivalent to appreciation of the dollar by about 5 virtually any.

The average exchange rate in 2018 will amount to 61-63 per dollar, although in the first half of the year it could drop to 65-66 per dollar.

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