Russia’s GDP growth will slow to 1.4% in 2024

This year’s first macroeconomic consensus forecast from FocusEconomics for Russia (based primarily on surveys of foreign analysts) still suggests economic growth in 2023 at 2.4%, with a slowdown to 1.4% in 2024 (by 0. 1 percentage point higher than in December) and up to 1.1% in 2025. The dynamics are similar to the consensus of forecasters surveyed by the Bank of Russia; According to FocusEconomics, the improvement in economic performance in 2024 rests on improved estimates for consumption growth (from 1.7% a month ago to 1.8% in January) and investment (from 2.3% to 2.5%, respectively), without the impact of estimates foreign trade. However, the spread is wide: 43% of FocusEconomics respondents predict Russian GDP growth in 2024 at 1.5%, 28% are confident at 1.2%, 13% each at 0.5% and 1.8%.

Andrey Gnidchenko from TsMAKP, based on his own sample of consensus forecasts from Russian analysts and international organizations (FocusEconomics is not included in it), notes that two clusters of forecasts are being formed – “around 1%” and “closer to 2%.” For each of the “clusters” he identifies five main arguments: ““In the region of 1%” is obtained from the base effect of 2023 (it is more difficult to grow from a high level – the effect of recovery growth will be exhausted), the shortage of workers for growth (unemployment at a record low level, competition between the civilian and military sectors for salaries, negative demographic trends), a high key rate that slows down demand and partially investments, an expected slowdown in the global economy in 2024, especially in China (a slowdown in growth in China by a percentage point could slow down economic growth in the Russian Federation by half a percentage point), and the fact that mortgages made a significant contribution to investment growth in 2023 (and in 2024, preferential programs are likely to be greatly reformatted).” Estimates of “closer to 2% growth” come from a high budget impulse (growth in government spending and changes in their profile), restoration of output in many civilian sectors (as in the automotive industry, where “the bottom has already been found”), investment boom, including with the participation of the state, the beginning of the return on investments in 2023, including in infrastructure (investments in fixed capital can increase the potential growth rate), and the continued reorientation of exports to the markets of friendly countries.

Artem Chugunov