BMI View: A persisting global oil glut, weak economic performance and rising political tensions willcontinue to affect the performance of the Russian power sector in 2017. In the medium term, issues of overcapacityand a weak ruble offer a dim prospect of growth in the power market, leading to a muted outlookfor the sector in our ten-year forecast.
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Ongoing economic and political tensions continue to play a crucial role for our 2017 outlook of Russia'spower sector. The annexation of Crimea and the Russian military intervention in Syria have increasinglybeen perceived as Russian belligerence towards the West and thereby shattered investor confidence,deterring significant foreign investment. Meanwhile, global oil prices continue to be affected by a globaloil glut with prices of about USD50/bbl in late 2016, and expected to continue in early 2017. Thesedevelopments in combination with tight credit conditions and a depreciated rouble have made thegovernment's budget assumptions untenable, which will necessitate further spending cuts.