MOSCOW (Reuters) -International trade wars, triggered by the United States’ protectionist policies, pose a key risk to the Russian economy, according to the country’s Economy Ministry, which published its high-risk forecasts for the first time on Wednesday.
In this scenario, the price of Brent crude oil is projected to be $58.1 per barrel, dropping further to $50 per barrel in 2026. Economic growth in Russia is expected to be 1.8%, compared to 2.5% in the base scenario, which most economists consider too optimistic.
“The scenario assumes an escalation of trade wars and a more significant slowdown in the global economy, which will reduce global demand and prices for oil and other traditional Russian export commodities,” the ministry said.
Previously, the ministry had reduced its forecast for the average price of Brent oil in 2025 in the base scenario by nearly 17% to $68 per barrel. Russia’s oil and gas revenues fell by 10% year-on-year in the first quarter.
The average price of the Urals blend of oil is projected to be $48.8 per barrel in 2025, compared to $56 per barrel in the base scenario.
The ministry projected 2025 inflation in the high-risk scenario at 8.2%, compared to 7.6% in the base scenario, and warned that a delayed shift to cutting the central bank’s key rate could exacerbate the situation.
“The risk is an untimely transition to the easing of monetary and credit conditions, which will limit the growth of investment activity and the expansion of domestic production,” the ministry said.
The rouble, which has rallied by about 38% to 81.7 to the dollar since the start of the year, is expected in the high-risk scenario to weaken to an average rate of 96.6 to the dollar in 2025, compared to 94.3 in the base scenario.
“The volume of goods exports will decrease more than the volume of imports, which will lead to a reduction of the trade balance and, as a result, to a stronger depreciation of the rouble,” the ministry said.
(Reporting by Darya Korsunskaya, writing by Gleb Bryanski, editing by Ed Osmond)
