As reported by Atradius, the Russian economy recorded a 1,9% GDP contraction in the first quarter of 2015 compared to the same period of the previous year due to the decline in consumer spending. However, the contraction is less severe (-3,5%) than previously expected (-4,3%). The improvement in the scenario was helped by the cuts in interest rates by the Central Bank which occurred on several occasions, from 17% in December to 12,5% at the end of April. Consequentially, business loans are expected to recover slightly in the second half of the year. In turn, in 2016 the Russian economy is expected to expand by 0,5%. In this scenario, the price of oil strengthened and capital outflows were thus lower thanks to the timid debt repayment program and modest reduction of international tensions following the Minsk II Agreement. The appreciation of the ruble, the recession and the austerity measures taken by the government to curb spending seek to contain inflation, which is expected to fall to 7% in 2016. The pressure on consumer spending will therefore be relieved to some extent thanks to the softening of the recession. L'Economic Intelligence Unit (EIU), an independent forecaster, predicts a 3,5% deficit in 2015, compared to a 3,8% forecast from the Russian government, where the deficit is intended to be financed by the Reserve Fund, one of two sovereign wealth funds.
