21 Sep 2022 12:36

Russia's GDP expected to contract 2.9% in 2022, 0.8% in 2023, to grow 2.6%/year in 2024-2025 - Reshetnikov

MOSCOW. Sept 21 (Interfax) - Russia's Economic Development Ministry forecasts the country's GDP to contract 2.9% in 2022 and 0.8% in 2023, and to grow 2.6% in both 2024 and 2025, Economic Development Minister Maxim Reshetnikov said on Wednesday in the Federation Council as part of the so-called government hour.

Reshetnikov announced the ministry's latest 2022-2025 macroeconomic forecast planned for consideration during a government meeting on Thursday.

Reshetnikov said that the low point of the decline in Russia's economy would pass in the fourth quarter of 2022 according to the forecast.

The ministry, in line with the minister's presentation, forecasts a decline in investments in fixed capital of 2% in 2022 and 1% in 2023 followed by growth of 3.9% in 2024 and 3.7% in 2025.

"It's expected that the low point in economic decline will be passed in the fourth quarter of this year. We expect GDP to contract 2.9% in 2022. A decline in investments is expected within the bounds of 2%. Unemployment at the end of the year is expected at a level of 4.5%. Inflation at the end of the year will slow to 12.4% after a peak of 17.8% in April," Reshetnikov said, laying out the forecast for 2022.

"A scenario of continuation of such an accelerated adaptation [of the economy to the new conditions] lays at the foundation of the forecast for socioeconomic development. It assumes that economic decline in 2023 will total 0.8%, predominantly due to the effect of a high base in the first quarter of 2022 and a reduction in net exports. GDP will grow at an average rate of 2.6% in 2024-2025 driven by growth in domestic consumer and investment demand," he said.

"Consumer demand will be supported by growth in the public's real income. A low level of unemployment and stable growth in real salaries and entrepreneurial revenue are projected until 2025. Indexation of social payments will make an additional contribution. All of this will substantially support consumer demand along with the recovery of lending," Reshetnikov said.

"In terms of investments - due to the high base of the first half of 2022, we expect a small decline [1%] next year. Investment growth will outstrip growth in GDP in 2024-2025 as a result of the investment cycle restarting and a high level of government investments," Reshetnikov said on investments.