“The International Monetary Fund cut its economic growth forecast for Russia, cautioning against the danger of stoking inflation with fiscal stimulus and urging policy makers to improve the business climate.
Gross domestic production will expand 2.5 percent this year and 3.25 percent in 2014, the Washington-based lender said in a statement today, compared with April predictions of 3.4 percent for 2013 and 3.8 percent next year. The Economy Ministry projects 2.4 percent growth this year and 3.7 percent in 2014.
“Fiscal stimulus at this time would likely be ineffective and merely intensify inflationary pressures, given that the economy is operating at full capacity,” IMF Mission Chief Antonio Spilimbergo said in the statement after completing the Article IV consultation of Russia’s economy. “Monetary policy should remain geared toward achieving inflation objectives.”
The IMF is inserting itself into a debate over a mix of policy tools needed to revive an economy growing at the weakest pace since a contraction in 2009. The government sees room to bolster the economy through a weaker ruble after rejecting calls to make the central bank partially responsible for growth, Finance Minister Anton Siluanov said in an interview last week.
The ruble weakened 0.5 percent against the dollar to 31.8950 as of 10:32 a.m. in Moscow. TheMicex Index (INDEXCF) of 50 stocks fell 0.3 percent percent to 1,321.62.