A consensus on the near future of the Russian economy is almost formed

The updated June FocusEconomics macroeconomic consensus forecast, which was attended by 36 economists from investment banks and research institutions, only three of which are Russian, in terms of assessing the growth of Russia’s GDP for 2023, pulled up to the consensus of 0.8%, which was previously received by the Central Bank (see. Kommersant of June 6), predicting a decline of 0.8% against a decline of 1.2% a month ago. The FocusEconomics forecast was increased by the improvement in private consumption growth estimates to 1% from 0.4%, with virtually unchanged estimates of investment decline expectations – 0.4% versus 0.3% and a slight deterioration in the foreign trade surplus forecast – to $165 billion from $169 billion.

Foreign analysts actually agreed with the Bank of Russia in assessing the future trajectory of inflation – it will accelerate to 5.7% by the end of 2023 (this is slightly above the middle of the regulator’s forecast range, while the consensus of Russian analysts fell into its middle – 5.5%). However, unlike Russian colleagues and the regulator, the FocusEconomics consensus does not yet see a decrease in consumer price growth to the 4% sought by the Central Bank in 2024, expecting inflation of 4.4% by the end of next year. The key rate, according to the consensus of the Central Bank, will remain unchanged in 2023 – 7.5% per annum. The middle of the Central Bank’s forecast range for inflation corresponds rather to the median trajectory of the rate with an increase to 8-8.5%, analysts of the Solid Numbers Telegram channel note. A similar rate level – 7.55% at the end of 2023 – is also seen by the median analyst at FocusEconomics, but with a slightly higher inflation rate.

Despite the downward revision of expectations for the price of Urals oil (from $60 to $56 per barrel), the Central Bank consensus expects the ruble to strengthen to achieve an average annual rate of 76.9 rubles/$, while FocusEconomics respondents agree on 77.8 rubles/$ with the same price of oil and a noticeably larger (by $40 billion) foreign trade surplus. In any case, this should mean the strengthening of the ruble before the end of the year. Against this background, the expectations of the FocusEconomics median analyst regarding the medium-term prospects for the Russian economy have not changed much – until 2027, its growth rate will not reach 1.5%, which Russian economists see as potential in the current conditions, and will remain noticeably lower than the world average and in the countries of Central (Eastern) Europe (see chart).

Artem Chugunov