Russian GDP drop in 2022 could be far milder than current forecast, in range of 3-5% - Belousov
ST. PETERSBURG. June 20 (Interfax) - The contraction of the Russian economy in 2022 could be far less severe than the Economic Development Ministry's current forecast of 7.8%, First Deputy Prime Minister Andrei Belousov said in an interview with Interfax on the sidelines of the St. Petersburg International Economic Forum.
In 2023, there will be zero growth or a slight decline due to the high base of the first quarter of 2022, he said.
"As for the current year, the estimate that the Economic Development Ministry gave for this year, a rounded negative 8%, I would say, is the maximum in terms of the depth of the drop," Belousov said.
"Based on calculations and the processes that are now unfolding in the economy, I think that the drop will be less, somewhere in the range of 3% to 5%," he said.
"There are several conditions in which the drop will be in the range [of 3-5%]. The most important one is growth of domestic demand," Belousov said.
"If there is no domestic demand, this will mean that we will get about the drop that the Economic Development Ministry is now forecasting. If we manage, through the joint efforts of the Bank of Russia and the government, to awaken domestic demand, activate it, then we can get a drop this year, I think, in the proportions that we're talking about right now, around 3-5%," Belousov said.
"As for next year, I think it's about zero value, that is, a dynamic of about zero. But statistically there might be a slight minus, since we had a very successful first quarter this year - there was double-digit, 12.8% growth [year-on-year] for investment and fairly high [growth of] 3.5% for GDP - so there will be the effect of a high base," Belousov said.
The Central Bank's current forecast projects that Russia's GDP will shrink by 8-10% in 2022, while the Economic Development Ministry forecast a contraction of 7.8%. However, both the Central Bank and the ministry have already said that they intend to revise their forecasts to reduce the projected drop.
The ministry has estimated that GDP fell 3.0% in April after growing 1.3% in March, 4.1% in February and 5.6% in January, and that there was growth of 1.7% year-on-year in the first four months of 2022.