The World Bank on Wednesday said Russia's economy would see a "robust" recovery in 2010, hiking its growth forecast to up to 5.5 percent but warned the rebound would be tainted by high unemployment.
"Russia is likely to witness a robust but jobless recovery," the Bank said in its latest Russia report.
It predicted Russia's gross domestic product (GDP) would grow between 5.0 and 5.5 percent this year, gaining traction in a global turnaround driven by developing powerhouses China, India and Brazil.
Russia saw its worst downturn in a decade last year with GDP shrinking 7.9 percent as the country was hammered by the global economic crisis.
The return to growth -- fuelled mainly by a pick-up in domestic demand -- will slow in 2011 as tight credit and unemployment constrain consumption, the Bank warned.
The Bank estimated growth would be sluggish at 3.5 percent in 2011 but ruled out fears that Russia could be hit by a second recession.
"A double-dip recession in Russia is not likely and recovery will be sustained, primarily driven by the revival of domestic demand -- consumption and investment," Zeljko Bogetic, the Bank's chief Russia economist and author of the report, said in a statement.
Wednesday's forecast trumped official figures and was significantly higher than the World Bank's previous 2010 growth estimate of 3.2 percent.
The Bank said part-time employment and involuntary vacations had mitigated the rise in unemployment, which remained below 10 percent throughout 2009, spiking at 8.2 percent towards the end of the year.
However, it warned that the Russian job market was lagging behind GDP growth and would shift to a higher natural rate of unemployment of around nine percent in 2010, saying young, urban men were most likely to be jobless.
"Russia will likely experience moderate job growth recovery with sustained high unemployed rates," it said.
Industrial output, which plunged 10.8 percent in 2009, will also drag behind the general recovery as growth is led by export-oriented sectors, the Bank said.
It reserved cautious praise for Russia's anti-crisis policies but said the country's greatest challenge remained an urgent need to restructure its economy and lessen dependence on commodity exports in the face of future financial shocks.
"The hardest part -- because there are far fewer recipes for success -- is how to diversify more rapidly from the mineral resource-based economy," the Bank said, warning lessons should not be "lost" amid recovery.
Meanwhile, the Bank increased its two-year forecast for crude oil -- a major driver of Russia's export-led economy -- to around 76-77 dollars per barrel.
The Bank said such prices could significantly reduce Russia's budget deficit, which has been projected to reach 6.8 percent of GDP this year.
Russia plans to borrow from the international debt markets this year for the first time since the trauma of its 1998 default, with a need to replenish state coffers depleted by the financial crisis.
Copyright 2010 AFP Global Edition
