{"id":10486,"date":"2023-04-14T15:43:57","date_gmt":"2023-04-14T15:43:57","guid":{"rendered":"http:\/\/lynettelockhart.com\/client\/russian-economy-ministry-improves\/"},"modified":"2023-04-14T15:50:54","modified_gmt":"2023-04-14T15:50:54","slug":"russia-raises-2023-gdp","status":"publish","type":"post","link":"http:\/\/lynettelockhart.com\/client\/russia-raises-2023-gdp\/","title":{"rendered":"Russia raises 2023 GDP growth forecast, longer-term outlook worsens"},"content":{"rendered":"

By Darya Korsunskaya and Alexander Marrow<\/p>\n

MOSCOW (Reuters) -Russia’s economy ministry revised higher on Friday its 2023 gross domestic product (GDP) forecast to 1.2% growth from a 0.8% contraction, but lowered its forecast for 2024, mirroring a wider trend that envisages more sluggish longer term prospects.<\/p>\n

The International Monetary Fund this week also raised its forecast for Russia’s 2023 economic growth, but said the country may see a sharply wider budget deficit and a smaller current account surplus this year. It said Russia’s global isolation and lower energy revenues could harm its growth potential for years.<\/p>\n

The economy ministry forecast GDP growth of 2% in 2024, down from 2.6% when it last provided macroeconomic forecasts in the autumn. <\/p>\n

Russia’s economy defied early expectations for a double-digit economic contraction in 2022, in forecasts made soon after Moscow sent troops into Ukraine in February of that year, but a return to prosperity remains a long way off as the government directs more spending towards the military.<\/p>\n

The Russian economy shrank 2.1% in 2022. Before Moscow began what it calls a “special military operation” in Ukraine, the government had expected 3% growth. <\/p>\n

The ministry, focused on bringing about a recovery in consumer demand, raised its forecasts for retail sales, real wages and real disposable incomes in 2023, but lowered them slightly for 2024. Unemployment is set to remain at a record low of 3.5% through 2026, the ministry estimates. <\/p>\n

“Demand will recover both as the population’s propensity to save is normalised and as consumer lending grows,” Economy Minister Maxim Reshetnikov said. <\/p>\n

SHRINKING SURPLUS<\/p>\n

Russia’s current account surplus is shrinking sharply, down around 73% in the first quarter of 2023. Robust oil and gas exports had combined with collapsing imports to push the surplus to a record high in 2022.<\/p>\n

The ministry almost halved its forecast for the current account surplus in 2023 to $86.6 billion from $157.6 billion previously and slashed its trade balance forecast by around a third to $152.1 billion. <\/p>\n

Economists from the Institute of International Finance said Russia had a large “excess” current account surplus in 2022, with a surplus above and beyond the normal seasonal path in 2021 and 2022. <\/p>\n

“This amounts to a windfall of roughly 13% of GDP, which contributed to flush liquidity in Russia’s financial system that \u2013 in turn \u2013 buffered growth,” the IIF said in a report published on Thursday.<\/p>\n

“This windfall has ended in 2023, with Russia’s current account surplus below ‘normal’, likely one reason why the rouble has weakened year-to-date,” it added. <\/p>\n

The rouble is down around 10% year-to-date, the third-worst performer among global currencies so far this year, struggling under the weight of a Western oil price cap and shrinking export revenues. <\/p>\n

The economy ministry lowered its rouble rate forecast to 76.5 to the dollar in 2023, from 68.3 in the previous forecast, and to 76.8 from 70.9 in 2024. <\/p>\n

BRENT SWITCH<\/p>\n

The ministry provided estimates of the Brent oil price, rather than Russian Urals as usual, envisaging an oil price of $80.7 per barrel this year and $75.7 per barrel in 2024. <\/p>\n

Interfax news agency quoted a source as saying that the switch was because Urals was now “unrepresentative”. Western sanctions have forced Russia to sell oil at a discount, skewing the Urals price. <\/p>\n

The ministry did not provide production and export estimates for oil, oil products and gas. A source told Reuters this was an effort to counteract sanctions.<\/p>\n

(Reporting by Reuters, Darya Korsunskaya and Alexander MarrowEditing by Gareth Jones and Barbara Lewis)<\/p>\n

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By Darya Korsunskaya and Alexander Marrow MOSCOW (Reuters) -Russia’s economy ministry revised higher on Friday its 2023 gross domestic product (GDP) forecast to 1.2% growth from a 0.8% contraction, but lowered its forecast for 2024, mirroring a wider trend that envisages more sluggish longer term prospects. The International Monetary Fund this week also raised its […]<\/p>\n","protected":false},"author":8,"featured_media":10487,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"spay_email":"","footnotes":""},"categories":[1216],"tags":[1223],"class_list":["post-10486","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-u-s-economy","tag-updated"],"jetpack_featured_media_url":"http:\/\/lynettelockhart.com\/client\/wp-content\/uploads\/Reuters_Direct_Media\/USOnlineReportEconomy\/tagreuters.com2023binary_LYNXMPEJ3D0E5-VIEWIMAGE.jpg","_links":{"self":[{"href":"http:\/\/lynettelockhart.com\/client\/wp-json\/wp\/v2\/posts\/10486","targetHints":{"allow":["GET"]}}],"collection":[{"href":"http:\/\/lynettelockhart.com\/client\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/lynettelockhart.com\/client\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"http:\/\/lynettelockhart.com\/client\/wp-json\/wp\/v2\/users\/8"}],"replies":[{"embeddable":true,"href":"http:\/\/lynettelockhart.com\/client\/wp-json\/wp\/v2\/comments?post=10486"}],"version-history":[{"count":3,"href":"http:\/\/lynettelockhart.com\/client\/wp-json\/wp\/v2\/posts\/10486\/revisions"}],"predecessor-version":[{"id":10849,"href":"http:\/\/lynettelockhart.com\/client\/wp-json\/wp\/v2\/posts\/10486\/revisions\/10849"}],"wp:featuredmedia":[{"embeddable":true,"href":"http:\/\/lynettelockhart.com\/client\/wp-json\/wp\/v2\/media\/10487"}],"wp:attachment":[{"href":"http:\/\/lynettelockhart.com\/client\/wp-json\/wp\/v2\/media?parent=10486"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/lynettelockhart.com\/client\/wp-json\/wp\/v2\/categories?post=10486"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/lynettelockhart.com\/client\/wp-json\/wp\/v2\/tags?post=10486"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}