The Ministry of Economy announced a slowdown in the decline in Russia’s GDP in October

The fall in Russia’s GDP in October slowed to 4.4% in annual terms after 4.5% in September, according to the review of the Ministry of Economic Development “On the current situation in the Russian economy.”

From January to October, the decline in GDP was 2.1%. At the end of the year, the agency still expects a reduction in GDP by 2.9%. According to the results of the third quarter, the economy shrank by 4% after 4.1% in the second quarter, follows from a preliminary estimate by Rosstat.

“In general, the dynamics of GDP is close to the predicted trajectory. The economy is supported by the construction sector and the agro-industrial complex, which show steady growth compared to last year. We also see a significant slowdown in the decline in the manufacturing industry, primarily due to growth in industries focused on domestic demand,” said Polina Kryuchkova, Deputy Minister of Economic Development.

The fall in industrial production also slowed down in October, amounting to 2.6% in annual terms after 3.1% a month earlier. For the third quarter, the decline was 1.3% in annual terms after a decline of 2.5% in the second quarter. The decline in the manufacturing industry in the third quarter was 2% in annual terms after 3.8% in the second quarter, and the volume of construction over this period increased significantly, reaching 6.7% in annual terms after 3.5% in the second quarter. The unemployment rate in the country in October did not change and amounted to 3.9%.

The Ministry of Economics earlier predicted inflation by the end of the year at 12.4%. A year earlier, this figure was 8.4%. It is assumed that in 2023 consumer price growth will be at the level of 5.5%, and in the future it will reach the target level of 4%. According to the results of this year, the country’s economy will contract by 2.9%, the Ministry of Economics expects, and in 2023 – already by 0.8%. In subsequent years, GDP growth is expected to be 2.6% per year.

In October, the World Bank improved an estimate of the fall of the Russian economy in 2022 from 8.9 to 4.5% and to 3.6% in 2023. In 2024, the economy may already return to growth, the WB believes. In the Ministry of Economics, this forecast was considered too conservative and does not take into account the planned and ongoing government decisions to support the economy.

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