The Ministry of Economy bases its macroforecast for 2024–2026 on a surge in investment
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The Ministry of Economy has prepared a new macro forecast for 2024–2026 – on September 12, the document was approved by the budget commission. Among the main parameters of the base scenario are GDP growth in 2023 by 2.8%, and in 2024–2026 by 2.2–2.3%, an increase in investment by 6% at the end of the current year and by 2.3–3% in the future, it is assumed that they will be predominantly private and only “supplemented” by budgetary capital investments. The authors believe that inflation, after 7.5% this year, will drop to 4.5% in 2024, and then to 4%, but the ruble over the forecast horizon will not strengthen to its previous values - its exchange rate will remain below 90 rubles/$ . The Ministry of Economy sees the main risks of fulfilling the forecast, which is rather a plan for the implementation of “sovereign” economic development, as a shortage of labor resources, external shocks and the likelihood of a tightening of the Bank of Russia’s policy.
The Ministry of Economy today presented the budget commission with a macro forecast for 2024–2026 – as a representative of the department said, following the review, the document was supported and will be submitted to the White House. Compared to scenario conditions, assessments of the prospects for the Russian economy were significantly improved. The external risks include the dynamics of the global economy – its slowdown, which may also affect world prices for Russian export goods, and the internal risks are the risks of labor shortages and further tightening of the monetary policy of the Bank of Russia.
First of all, in the basic scenario of the target forecast, the departments pay attention to the assessment of foreign trade parameters. They are not only noticeably underestimated compared to the recent consensus (see “Kommersant” dated September 7) in terms of imports (especially, as the representative of the department explains, it will be restrained by the growth of the key rate and exchange rate) and exports for the next three years, but also do not correspond to the ministry’s plans to “return the currency to the normal corridor” (70–80 rubles/$) ,” Deputy Head of the Ministry of Economy Ilya Torosov recently spoke about.
The average dollar/ruble exchange rate in the next three years will remain above 90 rubles/$, decreasing by 2027 to 92.3 rubles/$ against the background of a decrease in the average annual price of Brent oil from $85 per barrel in 2024 to $76.2 by 2027 year.
The ministry also expects relatively high foreign trade surpluses: $151.3 billion in 2024, 154.3 billion in 2025 and $161.2 billion in 2026. The current account balance of the balance of payments is also high – it is expected to be $80.7 billion, $77.8 billion and $80.8 billion, respectively.
Inflation, according to the forecast, will be 7.5% in 2023 – the figure was increased (previously the Ministry of Economy expected 5.3%) due to the transfer of exchange rate changes to prices, and in the future the department expects stabilization. At the same time, the transfer of exchange rate fluctuations into prices was “greatly mitigated” by the establishment of logistics, as well as increased competition between suppliers due to parallel imports. In 2024, inflation is projected at 4.5% (the increased level relative to the Central Bank target is explained by the indexation of tariffs, which was skipped in 2023), and in 2025-2026 – 4%.
It follows from the ministry’s figures that the target and noticeably higher growth rates of investment (6% in 2023, 2.3% in 2024 and further 3%) and private consumption (retail turnover should grow by 5.8. 3.6, 3.4, 3.5%, and services – by 4.1, 2.9, 2.4, 2.5% in 2023–2027) with lower growth rates of real wages and persistently low unemployment in 3.1% should, first of all, be satisfied with the rapid growth of domestic production (processing should grow by 7.2, 3.9, 2.5 and 2.6%, respectively). As a result, the overall economic growth rate, having reached 2.8% in 2023, will remain at the level of 2.2–2.3% until the end of the target period (the slowdown in 2024 includes the effects of tightening monetary policy), which , however, also looks too optimistic with respect to the current consensus.
As a representative of the Ministry of Economy notes, the forecast includes an increase in the role of investment from own funds, which are now being restored:
“Budget investments will continue throughout the forecast horizon, but they will not compensate for the decrease in private investment, but will complement them.”
This will be facilitated, from the point of view of state policy, by instruments that allow the distribution of risks between investors and the state, as well as by increasing the “appetites of banks to lend to risky structural transformation projects” – as support for investments in those sectors that will provide medium and long-term supply.
Let us note that this forecast generally fits into the mainstream of the “sovereign” economic policy of the relevant First Deputy Prime Minister Andrei Belousov. Its key areas are reliance on the repatriation of capital from Russian companies, active investments in the development of internal projects, a significant increase in investments in the repetition and reengineering of technically complex goods and technologies – in general, this is the concept of “technological sovereignty” of the Russian economy. The risks of this approach are also well known: most local markets in the Russian Federation do not have sufficient capacity to provide products with the necessary profitability; also a significant difficulty is the lack of technological, instrumental and material base for launching complex production or their dependence on foreign components and the remaining alternative for technology developers — participation in the global market.
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