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2007 November 21   12:39

Russia's economics ministry forecasts oil price at $74 in 2008

The world price for oil will average about $74 per barrel in 2008, a senior Russian economics ministry official said on Wednesday, RIA Novosti reports.

"The average price for oil next year could be about $74 per barrel," said Andrei Klepach, head of macroeconomic forecasts at the Economic Development and Trade Ministry.

Klepach said the average crude price forecast by the ministry for 2007 was $65-$67, but the actual price could reach $69 per barrel by the end of the year.

Klepach said the domestic economy was becoming increasingly sensitive to oil prices and the dynamics of capital inflow/outflow. "The stability of the payment balance depends on oil prices to a larger extent than before. It also has more dependence on capital inflow."

Russia's economy is now growing at maximum capacity, boosted by high global energy prices and a strong inflow of foreign capital, the World Bank said in a report published on Monday.

According to the report, Russia's GDP is expected to rise to more than 7% in 2007 compared with 6.7% in 2006, driven by growing household consumption and an increase in business activity.

Russia's Finance Ministry earlier said net capital inflow into Russia in 2007 would reach $80 billion, a twofold increase on last year.

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