Central Bank: Russia’s GDP grew by 4.8% in the II quarter

The Russian economy in the second quarter grew by 4.8% in annual terms after falling by 1.8% in January-March, according to a new report Central Bank on monetary policy.

In the III quarter, the regulator expects a slowdown in GDP growth to 3.6%, and in the IV – to 1.5%.

“The recovery phase of the economy as a whole is coming to an end – by the end of 2023, the economy will return to the level of 2021 or even slightly exceed it. As a result, in 2024–2025 growth rates will be more moderate,” the Central Bank notes.

In April-June, consumer activity continued to grow, with positive dynamics recorded in all major categories, analysts of the Central Bank emphasize. At the same time, business activity grew both in the basic industries and in the service sector. The recovery ahead of expectations, the regulator explained, is due to stronger domestic demand – public and private.

At the same time, price growth in Russia accelerated after a period of moderate increase, exceeding 4% in annual terms, the Central Bank draws attention.

“More significant inflationary pressure reflects the fact that the growth in demand, both from the state and consumer, is beginning to outpace the ability of the economy to expand output,” the report says.

Taking into account the monetary policy pursued by the regulator, inflation by the end of the current year is expected to be at the level of 5-6.5%. The indicator will return to the target of 4% in 2024, the Central Bank concluded.

21 July Central Bank raised forecast for Russia’s GDP growth to 1.5-2.5% after 0.5-2% in the spring forecast. The forecast was made taking into account new data on the dynamics of economic activity in the baseline scenario. According to the forecast, the GDP growth rate will be 1.5-2.5% in 2023, 0.5-2.5% in 2024, 1-2% in 2025. On the same day, the regulator raised the key rate immediately by 1 percentage point to 8.5%. The last time the Central Bank raised the rate to 20% in the crisis February 2022, and since September of the same year it has been at the level of 7.5% per annum.

Russian President Vladimir Putin at the end of July saidthat the growth rate of the Russian economy this year accelerated from month to month, so we can assume that in 2023 growth will completely cover last year’s decline. The authorities are counting on the growth of Russian GDP by more than 2% by the end of the year, the head of state noted.