Russia’s Economic Outlook for 2024 and Beyond
The VEB Institute has revised its projection for Russia’s 2024 economic growth to about 2 percent, reversing an earlier, more cautious stance. This update comes from a leading domestic think tank cited by the business press, and it reflects a careful balance between domestic momentum and ongoing external pressures.
In 2023, the Russian economy expanded by roughly 3.6 percent. The main drivers were a rebound in manufacturing, a surge in construction and trade activity, and stronger performance in information and financial services. According to VEB analysts, the key factors behind the year’s growth included stock accumulation, increased investments, and solid consumer demand within the domestic market. These dynamics helped offset some of the headwinds seen elsewhere and supported overall throughput across several sectors. [VEB Institute]
Looking ahead, the pace of growth in the coming year is expected to continue, but several constraints are likely to temper the expansion. Sanctions pressure remains a meaningful constraint on trade and investment, while fiscal consolidation and a weaker global economy could dampen external demand. Additionally, higher credit costs and rising import prices are expected to weigh on households and firms alike. The VEB Institute’s forecast has been adjusted from an initial 1.6 percent growth for 2024 to around 2.1 percent. For 2025, the projection sits near 1.9 percent, with a further strengthening to about 3.4 percent anticipated in 2026, contingent on policy responses and external conditions improving. [VEB Institute]
There is a sense among some observers that Russia could reach a level of technological leadership later in the decade, should domestic innovation and investment continue to accelerate and external restrictions ease. The broader conversation about technology hinges on how quickly new capabilities can be scaled and integrated into productive sectors, as well as how openness to international collaboration evolves under ongoing geopolitical pressures. [Economic analysis]
Meanwhile, the Central Bank’s policy stance has been characterized by a relatively high key rate during the recent period, a reflection of efforts to anchor inflation expectations while managing capital flows and financial stability. The exact level and direction of monetary policy will likely respond to inflation trends, exchange rate movements, and the evolving risk environment facing lenders and borrowers in the Russian economy. [Monetary policy assessment]