4 May 2023 16:40

Russia's GDP growth in 2023 could exceed forecast of 1.2%, which is conservative - Reshetnikov

MOSCOW. May 4 (Interfax) - The Economic Development Ministry's forecast for Russia's GDP to grow 1.2% in 2023 is rather conservative, as this figure is used to calculate the budget and must account for many risks, and growth could in fact be higher this year, Economic Development Minister Maxim Reshetnikov said during a meeting with President Vladimir Putin.

"The forecast is 1.2% [growth in 2023], though there is a specific feature in the forecast. You know that our forecast, as a rule, is adjusted upwards from the estimate. We are still a little more conservative, because of the budget; and yet, we still account for some risks; and, as a rule, then all these years we have really added to the plus [GDP dynamics at the end of the year have exceeded forecasts]," the minister said when commenting on the ministry's current official forecast.

"I think that we will be among the leaders among developed countries at the end of the year in terms of economic growth [the IMF forecasts average growth of 1.3% in developed countries' economies in 2023]," Reshetnikov added.

"Now the figures we have, they completely fit the situation with us. Good statistics on industrial production have come out: in March, up 1.2% compared to last year, our industrial production is really going up very well, including in engineering, metalworking, and the food industry. That is, where the processes of import substitution have actually begun, there are very visible growth rates. Moreover, our export-oriented industries are also adapting. Logistics is being rebuilt, and so on. In addition, we see that the temporary decline we had is now being overcome in all areas. The economy is adapting here," Reshetnikov added.

The Minister of Economic Development said, "The main source of growth is consumer demand, and consumer demand is based on the growth of the population's real incomes. We've put in almost 4% vs. the existing 3.4% forecast." He recalled that the forecast for growth in real wages in 2023 is even higher, "a minimum of 5.4%," he said.

The minister also said, "In the context of long-term low unemployment, it was 3.5% in March, we predict that the shortage in the labor market which has now developed will continue in the coming years, and this will spur the modernization of enterprises. Moreover, this pulls up wages. This, of course, is a completely new reality, which, along with continued investment, is changing the quality of our economy," he added.

As reported, the decline in Russia's GDP in March 2023 according to the Economic Development Ministry was 1.1% year-on-year after a decline of 2.9% in February and 2.7% in January. The decline in Russian GDP in Q1 2023 was estimated by the Ministry at 2.2% compared to Q1 2022, but from Q2 onward, the annual dynamics will most likely be positive against the backdrop of a low base in 2022.

On April 28, the Central Bank improved the forecast for the dynamics of Russia's GDP in 2023 to growth in the range of 0.5-2.0% instead of -1% to +1% in the February forecast.

Assistant to the President of the Russian Federation for Economic Affairs Maxim Oreshkin expects GDP growth in the Russian Federation in 2023 to be between 1% and 2%.