IMF expects Russia's GDP to fall 6% in 2022, 3.5% in 2023; forecasts global GDP growth of 3.2%, 2.9%

MOSCOW. July 26 (Interfax) - The International Monetary Fund (IMF) has improved its outlook for the dynamics of Russia's economy in 2022 to a fall of 6% in GDP rather than the drop of 8.5% that the IMF had forecast in April, according to the World Economic Outlook Update: Gloomy and More Uncertain review published on the IMF's website on Tuesday.

Meantime, the IMF has downgraded its outlook for Russia's GDP in 2023 to a decline of 3.5% compared to the previous forecast of a decrease of 2.3%.

According to the IMF, the risks to the updated global outlook are overwhelmingly skewed to the downside. Indeed, the Ukrainian conflict could lead to a sudden halt in gas imports from Russia to Europe; curbing inflation could prove more difficult if labor market deficits exceed expectations or inflation expectations cannot be anchored; tightening conditions in the global financial market are fraught with debt crises in developing countries; new outbreaks of Covid-19 and lockdowns, together with further escalating problems in the real estate sector, could further slow China's growth; and geopolitical fragmentation could hinder the development of global trade. Global GDP growth could slow to 2.6% in 2022 and 2% in 2023 in the alternative forecast scenario in which the said risks materialize.

For the second time this year, the IMF has downgraded its forecast for global economic growth to 3.2% from 3.6% in 2022 versus an increase of 4.4% expected in January. The IMF has lowered its outlook for 2023 to growth of 2.9% from 3.6% expected in April against 3.8% anticipated in January.

The IMF in January forecast growth of 2.8% in Russia's economy in 2022, and growth of 2.1% in 2023.

The IMF's new assessment of Russia's economy is within the range of expectations of the Central Bank of Russia (CBR), which forecasts a fall of 4%-6% in the country's GDP in 2022 against the previous outlook of a drop of 8%-10%; and a decline of 1%-4% in 2023 versus the previous decrease of 0% to 3%. The Economic Development Ministry plans to update its macro forecast for 2022-2025 in July by specifically revising its outlook for the fall in GDP in 2022 from 7.8% to a smaller decrease.