Russia expects the economy to contract in 2022. In the base scenario, this year's contraction could reach 8.8%. However, based on a bad scenario, the Russian economy could contract by up to 12.4%.
This can be seen in the Russian Ministry of Finance document released today (27/4). The potential for a deeper economic contraction could occur under global witness pressure.
This conservative estimate of Russia's economic growth is in line with the projections of former Russian finance minister Alexei Kudrin. He said earlier this month, Russia's economy was on track for a contraction of more than 10% this year, and was in for the biggest decline in gross domestic product since 1994.
In the same document, the Russian Ministry of Finance expects the economy to grow 1.3% in 2023, 4.6% in 2024 and 2.8% in 2025. However, in a conservative scenario, the economy is seen still contracting 1.1% next year. .
The extent of the economic damage in 2022 is unclear due to uncertainty over possible new sanctions and trade issues that will affect the country's economy. The government is likely to revise this economic growth forecast several times in 2022.
Russian inflation had jumped to 17.62% as of April 15, and is expected to continue rising to 22.6% for the whole year. That position is well above the Russian central bank's target of only 4% by 2023.
The spike in inflation has prompted Russia's central bank to raise interest rates to 20% from 9.5% at the end of February. This is an emergency measure, which according to Governor Elvira Nabiullina, helped stabilize the ruble and tackle a spike in inflation.
The bank's main interest rate was lowered to 17% on April 8 in another unscheduled move. Analysts polled by Reuters now expect rates to fall further, 200 basis points to 15%, at their next rate-setting meeting on Friday.
Still based on the same document, capital investment will slump 25.4%-31.8% after growing 7.7% in 2021. While real income is spendable, a very sensitive metric for Russia, especially with price increases reaching standards alive, could sink 9.7% by 2022.
On the other hand, the World Bank has forecast Russia's GDP in 2022 to contract 11.2%. This happened because of the Western sanctions imposed on Russian banks, state-owned companies and other institutions.
Follow Daily Post on Google News to update information quickly. Thank you for visiting our website..!! Don't forget to share any information to help develop our website..
