27 Apr 2024 11:13

Econ Ministry's conservative forecast sees Russia's GDP growing 2.2% in 2024, 1.6-1.7% in 2025-2027

MOSCOW. April 27 (Interfax) - The conservative scenario of the Russian Economic Development Ministry's macroeconomic forecast for 2024-2027 projects that the country's GDP will grow by 2.2% in 2024, 1.6% per year in 2025 and 2026 and 1.7% in 2027, the forecast scenarios published on the ministry's website, which were approved by the government on Tuesday, showed.

The ministry's baseline scenario forecasts growth of 2.8% this year, 2.3% in both 2025 and 2026 and 2.4% in 2027.

"On the part of external conditions, the key risks are a slowdown of the dynamic of the global economy amid continued tight monetary conditions and the tightening of the sanctions regime (particularly secondary sanctions. If external risks are realized, first of all demand will decrease for Russian export commodities, which will lead to budget risks, foremost as regards oil and gas revenues, as well as the reduction of investment in export oriented sectors," the ministry said, explaining the risks factored into the conservative scenario.

"Internal risks are related to capabilities to cover growing domestic demand with a sufficient level of supply of domestic products amid continued high interest rates and constraints on the labor market. Such risks could constrain the dynamic of investment activity, while the growth of domestic consumption will be satisfied by imports, particularly in sectors where the risks of an imbalance of demand and supply have already been realized," the ministry said.

The conservative scenario projects that the export price for Russian oil will be $62.50 per barrel in 2024, $58.30 in 2025, $54.70 in 2026 and $52.90 in 2027, while the baseline scenario assumes the price will be $65.00 in all of these years.

The conservative scenario forecasts that inflation will be 6.0% in 2024 (5.1% in the baseline scenario), 4.4% in 2025 (4.0%), 4.0% in 2026 (4.0%) and 4.0% in 2027 (4.0%).

The forecast for the ruble's average annual exchange rate against the U.S. dollar in the conservative scenario is 96.20 rubles for 2024 (94.70 rubles in the baseline scenario), 102.70 rubles for 2025 (98.60 rubles), 107.10 rubles for 2026 (101.20 rubles) and 110.80 rubles for 2027 (103.80 rubles).

The Russian government drafts the federal budget based on the baseline scenario of the ministry's forecast. The conservative scenario is less likely and is prepared by the ministry in line with regulations in order to highlight significant risks.