Prime Minister Mikhail Mishustin said at a meeting on economic issues that the Russian economy will shrink by less than 3 percent this year.
“GDP data are now significantly better compared to forecasts made in the first half of the year. “Let me remind you that some experts have predicted almost double digits for a possible decline,” he said.
He stressed that “the pessimists are wrong”. “Many organizations, including international ones, have improved their assessment of the dynamics of the Russian economy – IMF, World Bank, OECD. “According to our preliminary estimates, we may reach a benchmark below 3% by the end of 2022, perhaps.”
But despite the stability, “there are various forecasts and scenarios for the further development of events.”
“Given the possibility of further exacerbation of the global crisis and the dynamics of other factors, including the pressure of sanctions, we need to be extremely attentive to the ongoing processes and adequately respond to it,” he said.
According to the Russian prime minister, “all possible scenarios” should be analyzed and answers should be worked out. First of all, it is worth paying attention to “the further restructuring of the balance of payments, the devaluation of the economy and the expansion of international payments in rubles.”
“When coordinating the budget and monetary policy, we will jointly rely on the new budget rule approved by the head of state, under which we can allocate approximately 8 trillion rubles of oil and gas revenues to finance expenditures over the next three years. The chairman of the Cabinet of Ministers of Russia, ”said.
You also need to be prepared for possible changes in the job market. “There is a shortage of personnel in many areas. It is necessary to take concrete decisions to overcome this and ensure market flexibility.”
IMF forecast
In early October, the International Monetary Fund published a World Economic Outlook: Tackling the Cost of Living Crisis. The document points to more positive forecasts for the Russian economy than previously anticipated. The IMF believes that Russia’s GDP will fall by 3.4% in 2022 (expected 6% in July and 8.5% in April). According to the experts of the fund, in 2023, the Russian economy will shrink by 2.3%, not by 3.5%, as previously expected.
The decline in Russia’s GDP was facilitated by the sanctions that followed Russia’s special operation in Ukraine. In January, before the outbreak of hostilities, the fund predicted the Russian economy to grow by 2.8% in 2022 and by 2.1% in 2023.
Ministry of Economic Development Forecast
If the Ministry of Economic Development of the Russian Federation in April believed that in 2022 GDP will fall by 8.8%, and in May by 7.8%, then the department improved its forecasts. The Russian economy is expected to shrink by 2.9% in 2022, by 0.8% in 2023, and to grow by 2.6% in 2024 and 2025.
Belousov’s prediction
Russian First Deputy Prime Minister Andrey Belousov believes the country’s GDP will fall by 2.8-3% this year and 1% next year.
Belousov said that the Russian economy has already passed the low point of the decline in consumer demand and is approaching it in terms of investment. The Deputy Prime Minister also evaluated the Russian economy as more stable and predictable than the economies of EU countries.
Kudrin’s prediction
The head of the Accounts Chamber, Alexei Kudrin, gives roughly the same estimates as in the country’s government. In an interview with RT, he said that the decline in GDP will not exceed 3.3 percent in 2022. He acknowledged that the economic situation in Russia was better than initially thought.
“The unprecedented sanctions regime imposed on Russia is of course affecting our economy, and GDP was initially estimated to fall by more than 7%. Still, I now think the decline will only be around 2.9-3.3%,” he said.
He noted that this indicates the “fairly high” flexibility of the country’s economy. According to him, many businesses have been able to bypass Western sanctions and divert themselves to other markets or acquisitions.
It estimates that the economy could shrink by another 0.8% in 2023. At the same time, the head of the joint venture did not exclude “more complex scenarios”, given possible restrictions on the sale of Russian energy resources. He believes it will take two or three years for the Russian economy to return to pre-crisis levels “unless there are new difficult events”.