Ministry of Economy expects ruble to weaken to 72 rubles/$ in 2025

During a meeting of the State Duma on the budget and taxes, Maxim Reshetnikov, head of the Ministry of Economy, said that the department expects the ruble to weaken in the coming years. According to the macroeconomic forecast of the ministry, by 2025 the Russian currency should weaken against the US dollar to 72 rubles/$, while GDP growth rates should increase to +2.6% per year.

“At the rate of the ruble, its gradual weakening is laid down: from 68 rubles. in 2022 to 72 rubles/$ in 2025. At the same time, the real effective exchange rate of the ruble will remain stable, but 10–15% stronger than the average for 2016–2021,” Mr. Reshetnikov commented on the forecast of the Ministry of Economy (quoted from TASS). He also noted that by the end of 2022, inflation will be 12.4%, and GDP will decrease by 2.9%.

“Retail sales are expected to move into robust growth from 2023 after falling 6.1% in real terms this year. The average rate will be 3.2% per year,” the minister said about the prospects for consumer demand in Russia. He connected its dynamics with the growth of incomes of the population, which, according to his forecast, “will recover as early as next year.”

As of October 15, the official exchange rate of the Central Bank was 63 rubles/$. In May, when the ruble also reached a similar level, Mr. Reshetnikov declared on the “re-strengthening” of the Russian currency. This circumstance, according to him, plunges the Russian economy into a “deflationary spiral” and provokes a decrease in the competitiveness of Russian products in world markets.

Andrey Sapozhnikov