Central Bank: Russia’s economy will go at a moderate pace after a recovery period

The Russian economy after the recovery period will go at a moderate pace, declared at the Bank of Russia.

“After a period of recovery, economic growth will go at a more moderate pace. Rosstat’s preliminary estimate of GDP dynamics in the second quarter indicates a slowdown in quarterly growth from 0.7 to 0.1% [в квартальном выражении]”, says the bulletin “What the Trends Say”.

The regulator notes that “many operational indicators” of domestic demand pointed to a “greater expansion”. “Therefore, the dynamics of GDP was probably held back by a cooling in external demand and a significant recovery in imports,” the Central Bank said.

The economy in July-August 2023, according to the Central Bank, continued to grow at a relatively fast pace. Supported by government demand and producing consumer goods, industries continue to increase production, the regulator notes.

“Despite the growing restrictions on the part of production factors, the growth of the Russian economy continued in the second half of the summer. Signs of a slowdown that survey data showed in June and July gave way to a new round of recovery in August,” the bulletin says.

At the end of July, the Central Bank predicted an increase in Russia’s GDP in 2026 at 1.5-2.5%. At the same time, the board of directors of the regulator raised the key rate to 8.5% – since September 2022, it has been at the level of 7.5%. At an extraordinary meeting on August 15, the Central Bank immediately raised the rate to 12% due to pro-inflationary risks against the backdrop of a weakening ruble.

Formerly Deputy Chairman of the Central Bank Alexei Zabotkin did not rule out the possibility of raising the key rate at the council meeting on September 15. According to the Deputy Chairman, the risks of acceleration of inflation “remain significant.”