Russia’s economy will contract by 1.9 per cent in 2016 followed by growth of 1.1 per cent next year, the World Bank said yesterday, cutting its forecasts to factor in a weaker global oil price.

The international lender had forecast in December that Russia’s economy would contract by 0.7 per cent in 2016 and grow by 1.3 per cent in 2017.

Previously it had seen oil prices averaging $49 a barrel in 2016 whereas for its latest forecast it used a price of $37 a barrel.

The projected increase in poverty in Russia in 2016 would be the largest since the 1998-99 crisis

The World Bank said in its latest Russia economic report the projected increase in poverty in Russia in 2016 would be the largest since the 1998-99 crisis, eclipsing the pain from the 2008 global financial crisis.

It added that Russia was unlikely to meet its budget deficit target of three per cent of GDP in 2016 and that no serious structural reforms were expected before the 2018 presidential election.

In the meantime, Birgit Hansl, the lead economist for Russia, told a briefing yesterday that the World Bank did not necessarily see a large rise in oil prices if oil output freeze deal were reached between major oil producing nations later this month in Doha.