Positive developments must-not blunt reforms
Overview:
The economic recovery is gathering pace. GDP growth turned positive in Q1 and is expected to accelerate throughout the year. High oil prices are improving the current account and fiscal positions. Inflation is low. The ruble and FX reserves are both recovering from their respective low points reached during the global financial crisis. Amongst all this good news significant economic challenges remain. The central bank must try to keep inflation low as GDP growth returns to trend. It will also want to stop the ruble strengthening too far, too fast. In order to achieve this it will need support from the government. The IMF is urging a faster tightening of the non-oil fiscal balance. The authorities will also need to push through structural reforms if the economy is to prove more resilient to the next downturn in oil prices.