Russian economy to contract by 7% in 2022, to continue to decline in 2023, ruble weakening to accelerate inflation - Moody's

MOSCOW. March 6 (Interfax) - The Russian economy will contract by 7% in 2022 amid tough sanctions and their effects, Moody's rating agency said.

Russia's GDP will continue to shrink in 2023, the agency said in a press release on the downgrade of Russia's sovereign rating to the near-default Ca from B3.

This is one of the first current forecasts on the scale of the decline of the Russian economy, as so far, most analysts, whose previous estimates have become irrelevant with regard to the situation after the portion of harsh sanctions, have not published new ones.

"A sustained depreciation of the ruble will have severe economic consequences in the form of higher inflation and lower living standards," the statement said.

"While inflows of foreign currency from the export of Russian oil and gas may provide a cushion to the impact of these severe sanctions, this does not preclude, in Moody's view, the high likelihood of a sustained economic disruption and increased susceptibility to shocks. In addition, a further ratcheting up of the sanctions imposed on Russia by Western countries could very well apply to this vital source of foreign currency and government revenue," Moody's said.