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World Bank cuts Russian growth forecasts amid calls for economic overhaul

World Bank cuts Russian growth forecasts amid calls for economic overhaul
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The World Bank has reduced forecasts for the Russian economy, as a result of domestic structural challenges and falling global demand.

It is the second financial institution to cut Russian growth estimates in a week, after the International Monetary Fund trimmed its Russian forecasts on Tuesday.

Ksenia Yudayeva, deputy governor of the Central Bank of Russia says urgent action is required to overhaul the Russian economy: “Unfortunately, all kinds of changes which the Russian economy needs to go through right now, they can not happen overnight. It requires a change of behaviour from many, many people.”

The Russian economy was growing at around 7 percent up to the financial crisis of 2009, but since then the brakes have been applied.

The World Bank has reduced 2013 estimates from 2.3 percent to 1.8 percent. The figures for 2014, though up, are described as optimistic.

The report will not please President Putin who has called for growth above five percent.

Political interference and alleged corruption is scaring off investors,as Joe Rundle of ETX Capital explains:“The real question mark for investors is how you get access to Russia in a way that means you will get your money back without a political decision just to take away an asset or change the rules in a very significant way.”

The report urged Russia to do more to promote competition, and help new companies enter the market and grow. It also called on Moscow to be less reliant on energy commodities.