Russia’s Ministry of Economic Development has revised its gross domestic product (GDP) growth forecast for 2024 upward to 2.8 percent from 2.3 percent while expecting a weaker rouble and shrinking current account surplus in the coming years. The International Monetary Fund (IMF) echoes Russia’s sentiment, projecting a GDP growth rate of 3.2 percent from its earlier forecasts of 2.6 percent. The IMF cited robust government spending investments and higher consumer spending in 2024 despite challenges.
In 2025-2026, the ministry expects Russia’s GDP to grow to 2.3 percent. Meanwhile, it expects the rouble to decline to an average of 101.2 to the dollar in 2026 compared to the current 93 rate.
Impact of oil prices
Moreover, Russia forecasts a decline in oil prices and oil export prices of Russian oil to $65 a barrel until 2027. Currently, Russia’s Urals crude trades at around $79 per barrel.
However, economists suggest that Russia maintains a fiscal safety net, capable of withstanding prolonged economic pressures and declines in oil prices.
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Improved income and labor shortages
Russia expects real disposable incomes and retail trade to improve this year. The ministry expects incomes to increase by 5.2 percent in 2024, up from 2.7 percent in the previous forecast. When it comes to inflation, Russia expects to end the year at 5.1 percent, above the central bank’s 4 percent target. Therefore, analysts expect Russia to maintain its double-digit interest rates, currently at 16 percent, until mid-2025.
According to its forecasts, the economy ministry doesn’t expect a solution to the labor shortage any time soon. However, it expects unemployment to hover at 3 percent, near its record low of 2.8 percent, in the next 4 years.
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