Economic Development Ministry raises forecast for Russia's GDP growth in 2026 to 0.6% from 0.4%, keeps growth at 1.4% in 2027 - Reshetnikov
MOSCOW. Sept 24 (Interfax) - The Economic Development Ministry has raised its forecast for Russia's GDP growth in 2026 in its baseline scenario to 0.6% from 0.4% in the May version of the forecast, Economic Development Minister Maxim Reshetnikov said at a government meeting.
"We raised the estimate of economic growth in 2026 to 0.6% [from 0.4%]. For 2027-2029, we assume the acceleration of growth from 1.4% in 2027 to 2.4% in 2029," he said. The ministry forecasts economic growth of 1.9% in 2028.
The forecasts for Russia's GDP growth in 2027-2029 compared to the previous May iteration have therefore not undergone any changes.
"On the whole, the forecast remains moderately conservative," Reshetnikov said. "The external price environment may turn out better than our expectations," he said.
"At the same time, risks remain. They may lead to temporary deviations from the forecast growth trajectory," he said.
Therefore, "economic policy must be focused on increasing the flexibility and resilience of the economy and restarting the investment cycle," he said.
"The budget framework being presented creates space for easing monetary conditions and restoring investment activity," he said.
"This is in itself a necessary, as mathematicians say, but not sufficient condition for sustainable growth. The implementation of active structural changes is required," he said.
"External assumptions remain conservative. The Brent oil price for 2027 is set at $73 per barrel with a decline to $66 by 2029. When assessing external conditions, we take into account that futures quotes for the same grade, which are currently substantially higher, are volatile and largely reflect the current situation around the Arabian Peninsula," Reshetnikov said.
"The price forecast for Urals was raised less - by $1-$3, since we assume a wider discount to Brent. In 2027 we expect $53 per barrel, and by 2029 [we expect] $51. This is not much higher than the cut-off price of $50 established from 2027," he said.
"The oil production estimate for this year has been set at 494 million tonnes; in 2027 we expect a recovery to 500 million tonnes, and 505 million tonnes in 2028-2029," he said. "Regarding gas, for the next three-year period we take into account a reduction in supplies to the EU, a smoother increase in supplies to China and restrictions on LNG, primarily on the Arctic LNG 2 project due to sanctions," Reshetnikov said.
"We estimate the average annual exchange rate in 2026 at 79.5 rubles per dollar due to a stronger ruble in the second and third quarters. For 2027-2029 we maintain the forecast of a gradual weakening of the ruble," he said.
"Now about the sources of growth: consumption, investment and net exports. Consumer demand remains the backbone of economic growth. This year we expect a substantial increase, of 4.1%. Consumer activity is supported by growth in household incomes. Its main sources are labor and entrepreneurial income, as well as the fulfillment of all social obligations. Real monetary incomes in 2026-2027 will grow 0.8% and 1.5%, respectively. By 2029 we expect their growth to accelerate to 2.8%," he said.
"We estimate inflation at the end of 2026 at 6.8%. We expect inflation to return to 4% by the end of 2027, as assumed by the Central Bank of Russia," he said.
"The investment forecast takes into account a higher trajectory of the key rate in the Central Bank's forecast. The recovery of investment will begin in 2027, but growth will so far be small - 0.2%. In 2028-2029 we expect it to accelerate to 2.5% and 3%, respectively," he said when commenting on investment expectations.
"We expect the contribution of net exports to GDP growth for the next three-year period to be small but positive - on average about 0.2 percentage points per year," he said.
In sectoral terms, growth will be driven by industries oriented toward domestic demand, he said.
"Primarily manufacturing - its growth will be around 3.5% per year. The fastest growth will be in pharmaceuticals and mechanical engineering, including railway and aircraft manufacturing, and electronics production. Tourism, IT, and agriculture will also grow more rapidly," he said.
In order to launch a new investment cycle, "work is needed on the financial rehabilitation of companies," concentration of support on priorities based on a taxonomy of projects, increased mutual responsibility of investors and consumers of services based on long-term contracts with mutual obligations, and expansion of sources of financing, Reshetnikov said.
"The labor market remains a constraint, where unemployment remains at a very low level [2.3% in 2027-2029]. For this, implementation of programs to improve the quality of education, retrain workers, introduce technologies and change the organization of labor to increase productivity will continue," he said.
