Russia's Econ Ministry might raise current 2024 GDP growth forecast of 2.3% given strong start to year

MOSCOW. April 17 (Interfax) - Russia's Economic Development Ministry is finalizing the preparation of scenarios for its macroeconomic forecast and might raise the forecast for Russian GDP growth in 2024 from the current 2.3%, the director of the ministry's macroeconomic analysis and forecasting department, Lev Denisov said.

He also said the International Monetary Fund's forecast of 1.8% GDP growth in Russia in 2025 is "excessively pessimistic."

"We are now finalizing the preparation of scenario conditions for the forecast. The current estimate of the official GDP forecast for 2024 [projecting 2.3% growth] might be revised upward taking into account the strong economic growth at the beginning of 2024," the ministry's press service reported Denisov as saying regarding the IMF's revised forecast for Russia.

The IMF on Tuesday raised its forecast for Russian economic growth to 3.2% in 2024 and 1.8% in 2025 from the 2.6% and 1.1%, respectively, it forecast in January.

Denisov said a "positive dynamic is being seen in all key sectors of the economy."

"The main drivers of growth are sectors aimed at developing the supply side of the economy, foremost manufacturing sectors oriented toward domestic demand - the food industry, production of household appliances and others. Construction and retail trade are developing dynamically and the continued growth of consumer activity is providing support," Denisov said regarding the Russian economy at the beginning of this year.

In the near term, the trajectory of the economy's development will be affected by three key factors: monetary policy, the dynamics of investment and the rate of growth of labor productivity, he said.

"However, the new estimate for Russian GDP in 2025 announced by the IMF seems excessively pessimistic. For Russia it is important to maintain steady rates of economic growth, to ensure which the government is already implementing a broad range of measures," Denisov said, commenting on the IMF's updated forecast.

The Economic Development Ministry earlier estimated that Russian GDP grew by 6.0% in the first two months of 2024, with growth accelerating to 7.7% year-on-year in February from 4.6% in January, partly thanks to the extra day in February due to the leap year.

The ministry's official forecast released last September projects GDP growth of 2.3% in both 2024 and 2025. The Central Bank of Russia revised its growth forecast for 2024 in February to 1.0%-2.0% from 0.5%-1.5%, but kept its forecast for 2025 unchanged at 1.0%-2.0%.

The consensus forecast of analysts polled by Interfax at the start of April projected growth of 1.8% this year and 1.7% in 2025.

The Economic Development Ministry is scheduled to present its updated three-year macro forecast in April, and the Central Bank will also review its three-year forecast at the policy meeting of its board of directors on April 26.