Larger Russian GDP contraction eyed as weak oil price weighs - Reuters poll

MOSCOW (Reuters) - Forecasters have become gloomier on Russian economic growth and inflation prospects this year, a Reuters poll showed on Thursday, underscoring how a renewed slide in the oil price is hampering economic recovery. The poll of 12 economists predicted that gross domestic product would contract by 0.7 percent in 2016, a slightly more pessimistic outlook than last month's poll forecast of a 0.6 percent decline. The polled analysts have also grown gloomier on inflation. They now see it ending the year at 7.2 percent, compared with last month's end-year forecast of 6.5 percent, and only slightly down from 7.5 percent in June. Russia's economy has been gradually improving since last year, when the economy slumped by 3.7 percent and inflation spiked into double-digits. However, recovery prospects have been clouded by renewed weakness in the price of oil, Russia's main export. After pushing above $50 per barrel in June, international benchmark Brent has fallen towards $43 per barrel in July as excess supply in the oil market resurfaces. This has led to a weakening rouble, which adds to inflation risks and encourages the central bank to hold off from interest rate cuts. The respondents now see the rouble at 67.75 per dollar in three months and 65.81 in 12 months, which compares with last month's three-month and 12-month forecasts of 65 and 64 respectively. The central bank is now expected to be more cautious in cutting interest rates. The poll predicted two half-point cuts by year-end, which compares with 150 basis points in cuts predicted last month. The bank is forecast to hold rates when in next meets to discuss them tomorrow, in line with last month's poll and a separate Reuters rate poll on Monday. (Reporting by Zlata Garsyuta, writing by Jason Bush)