The Bank of Russia predicted economic growth of 0.5-1.5% next year

Following the meeting on the key rate on September 15, the Bank of Russia updated its medium-term macro forecast. According to it, next year Russia’s GDP will grow by 0.5-1.5% (in July the regulator expected growth of 0.5-2.5%). The estimate differs from the new forecast of the Ministry of Economic Development, which expects economic growth next year by 2.3%. The Bank of Russia left the forecast for GDP this year unchanged (1.5-2.5%), but worsened the lower limit of expectations for dynamics in the fourth quarter to 0.5-2% (compared to 1-2% in the July version ). The Ministry of Energy’s expectations for this year are also more optimistic – 2.8% (the estimate has been improved from 1.2%).

On September 12, the government commission on budget projections approved the socio-economic development forecast for 2024-2026 prepared by the Ministry of Economic Development, a representative of the Ministry of Energy reported. Based on this, the Ministry of Finance will prepare the main parameters of the budget for the next three years. Presidential aide Maxim Oreshkin promised “positive surprise” with the draft budget for 2024-2026. The government should consider the document next week, Oreshkin noted.

The regulator’s and the Ministry of Economic Development’s estimates of inflation also differed. The Bank of Russia expects the figure to be in the range of 6-7% at the end of the year, and the ministry predicts 7.5%. The Central Bank expects that inflation will return to the 4% target by the end of next year, and the Ministry of Energy by the end of 2025 (in 2024, the agency expects a price increase of 4.5% due to the postponement of indexation of housing and communal services tariffs from this year to next year ).

The trade balance this year will be at $119 billion (exports – $427 billion, imports – $308 billion), according to the macro forecast of the Central Bank. The Ministry of Energy expects higher exports and imports ($459.1 billion rubles and $313.8 billion, respectively). Next year, the Bank of Russia expects that exports and imports of goods will be approximately at the level of this year ($429 billion and $299 billion), the Ministry of Economic Development predicts their growth to $471 billion and $319 billion rubles. respectively.

The Bank of Russia expects prices for the Russian Urals oil grade to be at $69/barrel this and next year. Since last year, the Ministry of Energy has been making a forecast with prices for world Brent oil – they will amount to $83.5/barrel. in 2023 and 85 $/bbl. in 2024

The regulator also updated the forecast for the average key rate for the year – in 2023 it will be at the level of 9.6-9.7%, taking into account the fact that from September 18 to the end of the year it will average 13-13.6%, it says in the materials of the Central Bank. In a press release following the meeting, the Bank of Russia again gave a strong signal to the market – it will evaluate the advisability of further increasing the key rate at the next meetings. The Central Bank recalled that tight monetary conditions are necessary to return inflation to the target.

The Russian economy will grow by more than 2% in 2023, Russian President Vladimir Putin said during a meeting on economic issues. The growth of the Russian economy by the end of 2023 may be in the range of 2–3%, he said during WEF President – Chairman of the Board of Sberbank German Gref.

According to the Ministry of Energy, in July GDP grew by 5% compared to the same period last year. According to Rosstat, GDP growth in the second quarter of 2023 amounted to 4.9% in annual terms after a decline of 1.8% in the first quarter. Over the first half of the year, the economy grew by 1.6%, Rosstat estimated.

Experts interviewed by Vedomosti considered the Ministry of Energy’s estimates to be generally close to market forecasts, although with a number of reservations. Compared to consensus surveys, the GDP forecast looks more positive for both 2023 and 2024, noted Dmitry Kulikov, director of the sovereign and regional ratings group at ACRA.