Russia’s economy will be shrunk than expected over the coming years and could come back growth on a quarterly basis from as early as the end of 2022, a top government official informed on Tuesday.
The government is now forecasting a 2.9 percent contraction in Russia’s GDP for 2022, Russian news agencies reported – an improvement on its August prediction of a 4.2 percent annual decline, according to Economy Minister Maxim Reshetnikov.
Notwithstanding, the full year of 2023 the economy would still post a slight contraction of 0.9 percent, because of the high base effect of Russia’s strong growth of 3.5 percent in the first quarter of this year.
The new forecasts mark a significant enhancement from the predictions made just last month when the economy ministry predict a 2.7 percent fall in gross domestic product in 2023.
Russian officials have foreshadowed the economy’s performance in recent months, adding it is holding up much better than expected in the face of Western sanctions imposed over Russia’s invasion of Ukraine.
Some analysts have questions about Russian officials’ newly optimistic assessment of the economy in the medium-term, pointing to the slow-burn effects of sanctions and climbing costs from measures such as the European Union’s energy embargo and restrictions on Western technology exports to Russia.
The economy ministry on Tuesday also decreased its forecast for 2024, Reshetnikov said as it predicted shallower lower in 2022 and 2023 followed by a smoother recovery. It now expects 2.6 percent growth in 2024 instead of 3.7 percent.
He pointed the economy was on a trajectory to post GDP growth in excess of 3 percent a year after 2024 and stabilise at the country’s long-term growth rate of around 3 percent a year by 2026.
In April, after Russia sent tens of thousands of troops into Ukraine in what Moscow calls a “special military operation,” the ministry warned the economy could slump by more than 12 percent this year.
