12 Aug 2022 14:15

Central Bank: Russian economy to return to potential growth rates in 2025, oil price to equilibrium level of $55

MOSCOW. Aug 12 (Interfax) - The Russian Central Bank has maintained its forecast for Russia's main economic indicators in 2022-2024 and projects that the economy will return to potential growth rates in 2025.

"Economic recovery will continue in 2024 with 1%-2% growth in annual terms in the fourth quarter. The economy will return to potential rates of growth in 2025," the Central Bank said in its draft Monetary Policy Guidelines published on Friday.

The bank has estimated the potential rates of growth for Russia's GDP at 1.5%-2.5%, it said.

The Central Bank published a medium-term forecast in July projecting that the country's GDP would decrease 4%-6% in 2022, having previously forecast an 8%-10% decrease, that it would decrease 1%-4% in 2023 compared to 0%-3% earlier, and that it would grow 1.5%-2.5% in 2024, previously 2.5%-3.5%.

According to the draft guidelines, the price of Urals crude will return to the long-term equilibrium level of $55 per barrel in 2025.

"The Bank of Russia also expects gas prices to remain at elevated levels until the end of the year and for them to gradually correct in 2023-2025," it said.

According to the bank's baseline forecast, oil will be $80 per barrel in 2022, $70 per barrel in 2023, and $60 per barrel in 2024.

Deputy Economic Development Minister Polina Kryuchkova said in July that the Central Bank's medium-term forecast was close to the assessments of the Russian Economic Development Ministry

The Economic Development Ministry was planning to fine-tune its macroeconomic forecast for 2022-2025 this week. Economic Development Minister Maxim Reshetnikov said earlier that the official May forecast of 17.5% for inflation in 2022 would be revised down along with the 7.8% forecast for reduction in GDP in 2022.

The consensus forecast for GDP compiled by Interfax based on a survey of analysts at the beginning of August projects that the Russian economy will contract 5% this year, after having projected 6.3% in July, and 1.8% in 2023 compared to a previous forecast of 1.3%. The forecast for inflation is 13.6% in 2022 and 6% in 2023.