The IMF again improved the forecast for Russia’s GDP growth

Experts from the International Monetary Fund (IMF) raised their forecast for the growth of the Russian economy to 1.7% from 0.9%, which was expected in April. This follows from the July review of the World Economic Outlook. This is the third improvement in the IMF estimate this year. In the previous report, the organization raised its forecast for GDP growth in Russia from 0.3%, expected in January, to 0.7%. In January, the fund revised its expectations for economic dynamics in Russia from a decline of 2.3% to an increase of 0.3%.

The main reasons for the improvement in July, IMF experts cite the strong performance of the first half of 2023, due to “strong fiscal stimulus that strengthens this strength”, as well as a stable situation in the retail, construction and industrial markets. For 2024, the IMF maintained its forecast for economic growth in Russia at 1.3%.

The organization raised its expectations for global GDP from April 2.8 to 3% in 2023, for 2024 it remained at the level of 3%. The global economy is showing signs of a stable recovery, said Pierre-Olivier Gourinsha, adviser and director of the IMF’s research department. “The COVID-19 crisis has officially ended and supply chain disruptions have returned to pre-pandemic levels. Economic activity in the first quarter of this year was resilient despite difficult global conditions, including against the backdrop of unexpectedly strong labor markets,” he said in a blog post on the IMF website. Nevertheless, the expected growth indicators remain weak against the background of the tightening policy of central banks in the world, the IMF notes.

The Russian economy will grow by more than 2% in 2023, Russian President Vladimir Putin said during an economic meeting on Tuesday. “Already from the second quarter of last year, Russia’s GDP began to add about 0.5-0.7% quarterly… We expect that by the end of the year, GDP will add more than 2%,” the head of state said (quoted by RIA Novosti).

In April, the Ministry of Economy improved its growth forecast for the Russian economy from -0.8% to 1.2%, while the forecast for 2024 was lowered from 2.6% to 2%. By 2026, GDP will grow by 3%, Minister Maxim Reshetnikov said at the extended board of the department. He called the recovery of consumer demand the main source of growth.

On July 21, following the meeting of the Board of Directors, the Bank of Russia updated the medium-term forecast for the economy. Given the rapid recovery in demand, the Bank of Russia expects GDP growth this year by 1.5-2.5% (instead of 0.5-2.0%).

In July, analysts polled by the Bank of Russia also improved their expectations for Russian GDP from 0.5-2.0% in April to 1.5-2.5%. In 2024, respondents expect the economy to grow by 1.0–2.5%, in 2025 – by 0.5–3.0%.

According to the Ministry of Economy, in May, GDP grew by 5.4% compared to the same period last year. Such growth is connected, among other things, with the low base of last year (in May 2022, the indicator fell by 4.3%). According to Rosstat, in January-May, the economy increased by 0.6%. In the first quarter, the decline was 1.8% yoy.