17 Oct 2022 15:47

Econ Ministry expecting gradual weakening of ruble exchange rate to roughly 72 rubles/$1 by 2025 - Reshetnikov

MOSCOW. Oct 17 (Interfax) - The ruble exchange rate will gradually weaken in the coming years, by 2025 it is projected at 72 rubles per U.S. dollar, Economic Development Minister Maxim Reshetnikov said at a meeting of the State Duma Committee on Budget and Taxes.

"The ruble exchange rate is expected to gradually weaken - from 68 rubles/$1 in 2022 to 72 rubles/$1 in 2025. The real effective ruble exchange rate will remain stable, but 10-15% stronger than on average in 2016-2021," the Minister, presenting the macro-forecast.

"Inflation in 2022 will be 12.4%. This is significantly lower than the peak level. Let me remind you that in April in annual terms there was an acceleration to 17.8%. In 2023, inflation will already be 5.5%. Then it will reach the target level of 4%," he said.

"GDP in 2022 will decline by 2.9%. In 2023, the decline will already be 0.8% - and mainly because of the high base effect of Q1 2022, as well as the decline in net exports. Between 2024 and 2025, GDP will grow at an annual rate of 2.6%. The main driver of growth will be domestic demand - both consumer and investment demand," Reshetnikov said about expected GDP dynamics.

"Regarding consumer demand. Retail trade turnover figures are expected to move to steady growth from 2023 after a 6.1% decline in real terms this year. The average rate will be 3.2% per year. Growth of paid services to the population will be 2.3% a year," the minister said.

The increase in consumer demand will come primarily from growth of personal incomes, he said. "Real income will recover by next year, and average annual growth in real wages is expected to be 2.8% per year in the 2023-2025 period," Reshetnikov said.

"The unemployment rate is expected to be 'just over 4%' for the entire forecast horizon," the minister said.

"As for investment - in the second half of this year, we expect a decline [for 2022 as a whole, the ministry expects a 2% decline]. Recovery will begin in 2023. At the same time, a decline of 1% is expected in the year as a whole due to the high base of the first half of this year. And in 2024-2025, investment growth will already be 3.9% and 3.7%, respectively," Reshetnikov said.