The Central Bank presented its forecast for the development of the economy for the next three years
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The Bank of Russia published report “The main directions of the unified state monetary policy for 2023-2025”. The document presents scenarios for the development of the economy for the next three years in terms of the main indicators – inflation, GDP, and the key rate.
The main goal of monetary policy in the report is to keep inflation close to 4%. According to the Central Bank, taking into account the structural restructuring of the economy, reaching this indicator will require more than 1.5 years and will end in 2024. To achieve it, the Bank of Russia will adjust the key rate.
The Central Bank recalled that after raising the key rate to 20% in February, by the end of July, the key rate was reduced to 8.0% per annum. The Bank of Russia will assess the feasibility of reducing the key rate in the second half of 2022.
Average values of key economic indicators for the next three years (base case):
- The key rate in 2023 is projected at 6.5-8.5%, in 2024 – 6-7%, by 2025 – 5-6%;
- GDP in 2022 will be negative (from -6% to -8%), as in 2023 – (from -4% to -6%); in 2024, the indicator will reach a positive value of 1.5-2.5%; the same level is projected for 2025;
- Inflation in 2022 will be at the level of 12-15%, in 2023 – 5-7%, in 2024 and 2025 – 4%;
Apart from “Basic Scenario” Central Bank report contains scenario “Global Crisis”. It involves increased fragmentation of the world market and includes several risks: persistently high inflation in the world and, as a result, a recession; as well as additional sanctions against Russia. The combination of these risks could lead to a global crisis comparable to that of 2007-2008.
Under this scenario, annual GDP in 2023 will decline more than in 2022, and the decline will continue in 2024; a slight GDP growth will be possible only in 2025 (about 1%). Under this scenario, against the backdrop of a weakening ruble, inflation in 2023 will rise to 13-16%. In this regard, the Central Bank “will significantly increase the key rate compared to the baseline scenario and will maintain it at an elevated level.”
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