11 Mar 2022 11:12

CBR-polled analysts see Russian GDP falling 8%, inflation surging to 20% in 2022

MOSCOW. March 11 (Interfax) - Inflation in Russia could accelerate to 20% in 2022, while GDP will contract by 8%, analysts polled by the Central Bank in its monthly survey expect.

Measures being taken by the Central Bank and government are aimed at "limiting the scale of the economic decline and avoiding an extended period of high inflation," Central Bank deputy governor Alexei Zabotkin said.

"In the March survey, the forecast for inflation has been raised by 14.5 percentage points [compared to the February forecast] to 20.0% for 2022, by 4 pp to 8.0% for 2023 and by 0.8 pp to 4.8% for 2024," the survey published by the Central Bank said.

"In 2022, instead of growth of 2.4%, analysts expect GDP to drop by 8.0%. The growth forecast has been lowered by 1.1 pp to 1.0% for 2023 and by 0.5 pp to 1.5% for 2024. The estimate for long-term GDP growth rates has been lowered by 1.0 pp to 1.0%," the Central Bank said, commenting on the results of the survey.

"The Bank of Russia publishes the results of a macroeconomic survey of professional analysts. The significant revision of consensus forecasts reflects the radical change in economic conditions that has occurred in recent weeks. The high uncertainty of conditions and rapid change in the economic situation, in turn, resulted in a very wide range of estimates. However, the consensus forecast shows the economy returning to growth in 2023 and inflation slowing to 8% in 2023 and 4.8% in 2024," Zabotkin said in the statement.

"Measures being taken by the Bank of Russia and government are aimed at limiting the scale of the economic decline and avoiding an extended period of high inflation," he added.

The survey was conducted from March 1 to 9, and its results are the median forecasts of 18 economists from various organizations who participated in the survey, the Central Bank said, adding that if a respondent gave a forecast in the form of a range, the median figure was taken for calculation.

The forecast for the average key interest rate has risen by 9.8 pp from the previous month's survey to 18.9% for 2022, by 6.8 pp to 14.1% for 2023 and by 1.8% to 7.8% for 2024. The forecast for the neutral key rate has risen by 1.5 pp to 7.0%.

Analysts now expect an average exchange rate of 110 rubles per U.S. dollar in 2022, 118.40 rubles in 2023 and 120 rubles in 2024, compared to 75.00 rubles, 74.00 rubles and 75.00 rubles, respectively, a month earlier.

Analysts raised their forecast for nominal wage growth by 1.5 pp to 9.5% in 2022, 3.2 pp to 9.5% in 2023 and 0.8 pp to 6.8% in 2024.

Analysts also significantly raised their forecast for the five-year CDS (credit default swap) spread for Russia by 413 basis points to an average of 550 bp for 2022, 300 bp to 400 bp for 2023 and 180 bp to 275 bp for 2024.