31 Jan 2023 12:05

IMF starting to converge with Russian GDP forecasts, growth rate to depend on demand, lending stimuli - Econ Ministry

MOSCOW. Jan 31 (Interfax) - The International Monetary Fund's latest forecast, according to which Russian GDP could grow 0.3% in 2023, is not far from Russia's own outlook: further recovery will depend how much consumer demand picks up and what measures can be taken to encourage lending, the Russian Economic Development Ministry said, commenting on the IMF World Economic Outlook published on Tuesday.

"The estimates by IMF experts are beginning to converge with Russia's own forecasts. The Russian economy is definitely overcoming the sanctions barriers set up by unfriendly countries. Further economic recovery in 2023 will depend on the recovery of consumer demand, as well as measures to ensure both corporate and consumer lending growth," the ministry said.

"Estimates for this year and the years to come will be updated according to the socio-economic development forecast scenarios [in March-April]," it said.

The IMF in its latest report changed its forecast for Russian GDP in 2023: it now expects GDP to grow 0.3% after previously forecasting decline of 2.3%, and said growth might accelerate to 2.1% in 2024.

The IMF's latest forecast for 2023 is considerably more upbeat than official Russian ones.

The Econ Ministry is expecting the economy to shrink 0.8% in 2023 and the Central Bank expects a decline of 1-4%. The ministry plans to adjust its macroeconomic forecast in March-April, as scheduled, and sees no point reacting to momentary oil price fluctuations. The Central Bank will update its forecast in February.

Analysts told Interfax in a consensus forecast at the end of December that they thought GDP would fall 2.2% in 2023.

First Deputy Prime Minister Andrei Belousov said at the end of December that the situation in the Russian economy in 2023 will be "much easier" than in 2022, with GDP trends expected in the range of near zero to minus 1%.

"I think it will be about zero [the dynamics of Russian GDP in 2023]. The forecast we have now is about minus 1%, slightly less [minus 0.8%]. It will be somewhere around minus one to zero [in 2023], because we had a very good first quarter of this year, so the base effect will still have an impact," Belousov said. "Speaking generally, in principle we think that 2023 will be, if nothing happens, naturally much easier than 2022. We do not see any fatal problems there. Because we were able to manage the situation well in H1, everything is now under control, and our policy is quite proactive," Belousov said.

The Russian economy performed better than the IMF expected it to in 2022. The IMF's October forecast envisaged GDP decline of 3.4%, following forecasts of 8.5% in April and 6% in July. But the economy ultimately fell around 2.5%, according to preliminary estimates. The IMF said in the outlook on January 31 that it thought Russian GDP had shrunk just 2.2% in 2022.

The IMF said in January 2022, before the special military operation in Ukraine and the sanctions against Russia that ensued, that that Russia's economy might grow 2.1% in 2023. It later said GDP might fall 2.3%, then 3.5%, before changing the forecast decline back to 2.3% in October.