NWF resources investing may increase inflation risks in Russia

TASS Russian News Agency | Dec 4, 2019 at 12:34 PM


MOSCOW, December 4. /TASS/. Investing resources of the Russian National Wealth Fund (NWF) after its liquidity component reaches 7% of GDP can increase dependence of the country's economy on energy prices and boost inflation risks, the World Bank says in its Russia Economic Report released on Wednesday.

"The liquid part of the National Wealth Fund (NWF) should exceed 7 percent of GDP in 2020, creating a legal opportunity for the government to invest part of the NWF in domestic infrastructure projects. However, substantial domestic investments of the NWF could render the economy more dependent on energy prices and heighten inflation risks," the Report says.

"Key risks to the growth forecast include a weaker global economy, elevated trade tensions, and domestic factors," the World Bank noted. External shocks can affect Russia through trade, financial, and commodity market channels, according to the report.

"Russia also remains exposed to the possibility of additional economic sanctions, which may further dampen domestic and foreign private investment," the World Bank noted.