31 Mar 2022 13:45

EBRD expects Russian GDP to shrink 10% in 2022, remain flat in 2023

MOSCOW. March 31 (Interfax) - The European Bank for Reconstruction and Development (EBRD) expects Russia's GDP to shrink 10% this year and remain flat on 2023, the bank said in a new forecast.

The EBRD said in its previous forecast in November that it thought the Russian economy would grow 3% in 2022.

The launch of the military operation in Ukraine and sanctions imposed on Russia have rendered previous forecasts obsolete. Moody's said at the beginning of March that it now expected Russian GDP to plummet 7% this year, and the Central Bank said analysts predicted a drop of 8% in a consensus forecast.

The EBRD said Ukraine's GDP might shrink 20% in 2022 - it was forecasting 3.5% growth in November - but rebound in 2023 and soar 23%.

It said Belarusian GDP might fall 3% in 2022 compared with the 0.2% growth it was forecasting in November, and remain flat in 2023.

"Projections are subject to an exceptionally high degree of uncertainty, including major downside risks," the EBRD said. It plans to prepare its next forecast in the next couple of months.

"The forecasts assume that a ceasefire is brokered within a couple of months, followed soon after by the start of a major reconstruction effort in Ukraine" which will bring GDP by end-2023 back close to, but still below, previous levels, the EBRD said. "Sanctions on Russia are expected to remain for the foreseeable future, condemning the Russian economy to stagnation in 2023, after a sharp GDP drop in 2022, with negative spillovers for a number of neighboring countries in Eastern Europe, the Caucasus and Central Asia," the EBRD said.