Participants of the consensus forecast of the Central Bank improved their estimates for the Russian economy

The Bank of Russia presented the first consensus forecast of the main macroeconomic indicators this year. 28 analysts surveyed by the Central Bank have improved their expectations for the economy this year – now they expect a decline in GDP by 1.5% against 2.4% expected in December. According to their estimates, last year the decline was also smaller – 2.5% instead of 2.9% expected in the previous survey.

At the same time, analysts worsened the growth forecast for the Russian economy for 2024 by 0.3 p.p. – up to 1.2% and left unchanged the forecast for 2025 (+1.5%). The range of expert estimates for the next two years is quite wide – from a decline of 6.5% to an increase of 0.4% in 2023 and from a decrease of 2.4% to an increase of 3.1% in 2024.

At the end of 2022, Russia’s GDP, according to preliminary estimates, decreased by 2.5%, President Vladimir Putin reported in mid-January. According to Rosstat, in the third quarter, Russian GDP fell by 3.7% in annual terms after 4.1% in the second quarter. Rosstat will publish official GDP statistics for last year on February 17. According to the Ministry of Economic Development for January-November, the decline was 2.1%.

According to the forecast of the Ministry of Economic Development, the economy will decline by 0.8% in 2023 and grow by 2.6% in 2024-2025. The Bank of Russia forecasts a decline in the range of 1-4% this year.

The International Monetary Fund (IMF) in its January review significantly improved its assessment of the Russian economy. According to the IMF forecast, Russian GDP in 2023 will grow by 0.3% after a decline of 2.2% in 2022. At the same time, back in October, the fund expected Russia’s GDP to fall by 2.3% in 2023.

Experts raised their inflation expectations for 2023 from 5.8% to 6%, but lowered their expectations for 2024 from 4.2% to 4.1%. Analysts still expect the figure to return to the 4% target in 2024.

According to Rosstat, inflation in Russia in 2022 amounted to 11.94%. At the end of the year, the rise in prices was spurred on by unscheduled indexation of utility tariffs. Services in December rose in price by 13.19% in annual terms, non-food products – by 12.7%, food – by 10.29%.

The Ministry of Economics predicts a price increase of 5.5% in 2023. In the first quarter of 2023, inflation in the country “will significantly decrease year on year”, already in the second quarter the ministry predicts inflation below the target level of 4%, said the head of the ministry Maxim Reshetnikov on President’s meeting in January. The Bank of Russia forecasts inflation in 2023 at the level of 5-7%.

“Analysts expect a slightly weaker ruble compared to the December survey over the entire forecast horizon, with a gradual weakening trend similar to the December survey,” the Central Bank said in a comment. The forecast for 2023 is 72.0 rubles/$, for 2024 – 73.8 rubles/$, for 2025 – 75.6 rubles/$.

In 2023-2024 analysts expect a higher trajectory for the key rate compared to the December survey – forecasts rose by 0.2 percentage points. up to 7.5% per annum and 6.8% respectively. For 2025, the consensus forecast for the average key rate is 6% per annum. The next meeting of the Board of Directors of the Central Bank on the key rate is scheduled for February 10. Now it is 7.5%.

According to preliminary estimates by the Bank of Russia, last year exports in value terms amounted to $628 billion (an increase of 14% compared to 2021). Economists expect that the export of goods and services in value terms will stagnate for all three years. According to their estimates, it will amount to $493 billion in 2023, $500 billion in 2024, and $502 billion in 2025.

Imports, according to the Central Bank, decreased by 9% in 2022 to $346 billion. Analysts expect supplies to Russia to recover to $360 billion in 2023, $374 billion in 2024, $390 billion in 2025 .

Nominal wages will grow by 7% in 2023, by 6.8% in 2024, and by 6% in 2025, according to the survey data. In addition, according to the consensus forecast, analysts expect a smooth decline in unemployment from 4.3% in 2023 to 4.0% in 2025. Last year, the rate was at a record low. In November, the unemployment rate fell to a historic low of 3.7%. In October, the total number of unemployed was 2.897 million people, in November it fell to 2.745 million people.