Russia's central bank has forecast zero economic growth for 2015 and only 0.1% growth for 2016, in a three-year monetary policy plan that underscored the damaging impact of Western financial sanctions on the domestic economy.
In addition, the monetary policy strategy – Guidelines for the Single State Monetary Policy in 2015 and for 2016 and 2017 – anticipated that Western sanctions against Russia will remain until the end of 2017.
In the revised monetary plan, published on 10 November, the regulator significantly raised its forecasts for net private sector capital outflows, to $128bn (£80bn, €100bn) in 2014 and $99bn in 2015.
The dim forecasts recognised the two major external shocks to the Russian economy: falling oil prices and Western sanctions imposed over the Ukraine crisis.
Rouble Free Float
The bank also announced on Monday it would allow the rouble to float freely, after it abandoned the currency's trading corridor. The bank reasserted in a statement that it would intervene in the foreign currency market if it saw a threat to financial stability.
The three-year monetary plan has been revised significantly since September, when the bank published a draft version that predicted economic growth of 1% in 2015 and 1.8% to 2% in 2016, with oil prices recovering to above $100 per barrel.
Falling oil prices and geopolitical tensions have put intense pressure on Russia's currency, amid fears that its economy is heading for a recession. Prices have dropped over 25% since June, slashing the revenues Moscow received from energy exports.
Russia's economic outlook worsened since Moscow's annexation of the Black Sea peninsula of Crimea provoked a wave of economic sanctions from Western powers including the US and the European Union.