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10 Feb, 2020 12:33

Coronavirus likely to have minimal effect on Russia's economic growth — Alexei Kudrin

Coronavirus likely to have minimal effect on Russia's economic growth — Alexei Kudrin

Russian economy could feel the impact of the ongoing coronavirus epidemic, but it is likely to be less damaging than expected, according to the head of Russia's Accounts Chamber, Alexei Kudrin.

"It [the coronavirus outbreak] will have an impact on the economic growth rate, but it will be minor," the former finance minister told reporters on Monday. "It might be within 0.1 - 0.2 [percent of GDP]."

The virus has severely affected the demand for oil, as China is one of the major global importers. This has been driving oil prices down since the beginning of the year and the demand is unlikely to fully rebound, the executive of the Accounts Chamber noted. Thus the outbreak is set to affect Russia's budget revenues.

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Nevertheless, Russia could even boost its economic growth, as it has many "other opportunities", according to Kudrin. He explained that if the government will use available uncommitted resources that are not fully invested, then the GDP can rise despite economic losses caused by the coronavirus. Kudrin also pointed out that a sudden change in the investor mood can also happen regardless of any epidemic.

The rapidly spreading disease has already killed more than 900 people, while the number of cases exceeds 40,000. The virus has become a "shock" for the Chinese economy, as production in some industries was cut by nearly 50 percent, according to Kudrin. However, he believes that the situation is set to improve by the end of the year.

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Earlier this month, global credit rating agencies downgraded their forecasts for China due to the coronavirus epidemic. Last week, Standard & Poor's slashed its growth forecast for the country by 0.75 percent to 5 percent — a sharp drop given that last year it expanded by 6 percent. There are also fears that the coronavirus could hurt global growth, given that China contributes much to it, and hosts factories of many global companies.

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