Momentum in Russia’s economy remains weak. Tax hikes in early 2019 and rising interest rates from late 2018 through mid-2019 have hit investment, production and retail sales. Economic sanctions have taken some toll on exports and business investment. The IMF projects somewhat higher economic growth of around 2% in the next five years, driven primarily by higher public investment.
Without further structural reforms, the government will struggle to lift growth above 3% and hit its fixed investment target of 25% of GDP by 2024. Key downside risks to the outlook include decelerating growth in major trading partners, the European Union and China, weaker commodity prices, and the possibility of stricter Western sanctions.
