10 Feb 2023 15:59

Central Bank's improved 2023 Russian GDP outlook due to higher budget spending - Nabiullina

MOSCOW. Feb 10 (Interfax) - The Central Bank of Russia's improved 2023 Russian GDP outlook can be explained both by a revision of estimates for previous periods and the increase in budget spending compared to October estimates, Central Bank Governor Elvira Nabiullina said at a briefing following the CBR bar meeting at which the key rate was left at 7.5% per annum.

The Central Bank on Friday, improved the 2023 GDP outlook to between -1% and +1% instead of a decline of 1%-4% in the October forecast.

"Major structural shifts in the economy are still underway. We have improved our GDP forecast for this year. This is associated with an upward revision of the assessments for previous periods, on the one hand, and with higher budget expenditures than assumed in our October forecast, on the other hand," Nabiullina said in comments posted on the CBR website.

Structural changes in the economy cause a steady expansion of output in a number of sectors, while others are facing a decline in their output. The former include, among others, some manufacturing sectors and construction that are ramping up their output. Transportation infrastructure is quickly developing, with government investment becoming increasingly important in this industry," she said.

"Contrastingly, investment projects in the private sector can be suspended or decreased because the required equipment is unavailable or companies are uncertain about future demand," Nabiullina said.

The contribution of budget expenditures to aggregate demand dynamics is growing overall," she said.