Belousov believes that without extraordinary events in 2023, the Russian economy will face a gentler path than in 2022.
“We think that if nothing unexpected happens, 2023 should naturally be much easier than 2022: there isn’t a fatal obstacle on the horizon,” he told reporters at the sidelines of the APEC summit.
According to him, a sharp GDP surge is unlikely — “next year we may see around 3% growth, but we cannot count on it; it will probably be lower.”
“This year looks fairly stable, with a decline somewhere around minus 3%, minus 2.9%, minus 2.8%. We believe a 1% drop could be offset next year,” he explained.
He also suggested that inflation in 2023 could stay below the forecast 5.5% for the Russian Federation.
“Our projection for the coming year sits around 5-6%, near 5.5%. I expect it will likely be lower. The Central Bank of Russia is monitoring the situation. There are signs that growth remains subdued as deflation persists. The central bank may further ease policy,” Belousov noted.
At first, the Bank of Russia anticipated an economic contraction of 8-9%, with the Ministry of Economic Development projecting 7.8%, following the initial rounds of Western sanctions tied to the special operation in Ukraine. The central bank also forecast 5-7% inflation for 2023, with a return to about 4% anticipated in 2024-2025.
The system may “break down”
Belousov argued that authorities hold enough leverage to address the economy’s challenges, making mobilization of the financial system and other institutions unnecessary.
“So there is no point in building a mobilization economy now; it would not work. We possess substantial reserves and leverage we can use to meet the president’s tasks and the realities of life. This exists both in the state and within the country,” he asserted.
Yet the Deputy Prime Minister admitted concern about potential loss of control if the economy were to “fall apart.”
“Control was regained… There were two critical moments: in March, especially early March, and then around late April to June. A system has a limit to how long it can be managed; when reactive processes grow, chaos can push the system beyond control. There was a moment in March that felt like we could be heading in that direction.”
Belousov explained that as Russians began withdrawing large sums of cash, including foreign currency, the biggest worries centered on trade and demand. He noted that logistics problems soon emerged domestically.
“Around that time, the Ministry of Transport and its headquarters worked around the clock to manually route logistics to ships and trucks. The Ministry of Industry and Trade coordinated similarly with trade, and the Central Bank operated in the same mode.”
Strong rubles and salaries
Belousov highlighted that the government is worried about slow real wage growth and that this issue will require attention next year. “That is the flip side of low unemployment,” he said. He also noted that consumer demand had fallen due to a retreat in consumer lending.
On exchange rate volatility, he observed that “the strong ruble has already played its part.” He added that at the current stage the Russian economy benefits when the rate hovers around 70-80 rubles per dollar, since this supports investment activity.
The ruble’s depreciation versus the dollar and the euro began in December and intensified mid-month. Between December 12 and 16, the ruble slid from 62.8 to 64.65 per dollar and from 66.37 to 69.1 per euro. From December 19 onward, the decline accelerated — the dollar traded near 70 rubles and the euro near 75. By December 26, rates stood at about 68 per dollar and 72 per euro. On December 27, the figures were around 70 and 75 respectively.
Withdrawal and lending
Belousov warned that the riskiest investment move right now is removing money from Russia, and business leaders share this concern. He argued that retaliatory restrictions tied to Western sanctions undermine opportunities that require agility and resources.
Belousov highlighted a recent meeting with the Union of Industrialists and Entrepreneurs and the representatives of the Russian Union of Industrialists and Entrepreneurs, who voiced a unified stance in favor of investment vehicles within Russia.
The Deputy Prime Minister also pointed to a sharp drop in corporate credit and a nearly 30% decline in exports.
“This surpasses all expectations for stagnation. It indicates that banks, as a system, have not yet begun lending to businesses. There are signs of progress, but the overall system has yet to function smoothly,” Belousov concluded.