The onset of a recession in the Russian economy this year is unavoidable, experts told Nezavisimaya Gazeta, with more pessimistic analysts predicting an up to 7% decline in GDP.
International rating agency Standard & Poor’s (S&P) forecasts a 0.8% decline in Russia’s economy. Experts told the newspaper that quarantine measures currently underway in major cities will accelerate the decline.
Meanwhile, the Russian government believes that, despite the fall in oil prices and the uncertainty associated with the pandemic, the Russian economy is developing “within the framework of the planned trends,” Nezavisimaya Gazeta writes.
According to the (S&P) study, facing a decline in external demand and falling investment, economic growth is likely to reach 3.8% in 2021. Analysts also expect a federal budget deficit of 2.8% of GDP in 2020 and 0.4% in the next. In real terms, exports will decrease by 2%, the investment will slump by 6%, while per capita GDP will dive from $11,500 to $9,500.
Russian analysts generally agree with the forecast. VEB’s chief economist Andrey Klepach believes that, at best, the country can expect stagnation this year. “Due to a clash with oil prices and a reduction in demand due to the onset of the pandemic, our growth will be somewhere around 0.1%,” he said.
In contrast to independent economists, Russian officials seem very upbeat about the Russian economy, the newspaper reported. The governor of the Bank of Russia Elvira Nabiullina said that so far she does believe a recession in the country is possible. Russia’s finance chief Anton Siluanov pointed out that Russia’s GDP growth in January-February amounted to 2.3%, and that the national economy is still developing within the planned parameters.
Unlike government officials, experts interviewed by Nezavismaya Gazeta are confident that a recession in Russia is virtually inevitable. “An acceleration of inflation due to the devaluation of the ruble will undermine consumer demand, investments will fall due to increased uncertainty, many will lose their jobs or face lower wages,” BCS Premier Senior Analyst Sergey Suverov told the newspaper.
This year the Russian economy got off to an unfavorable start, and the worst part is that it is impossible to predict the further impact of the pandemic on the economy, Alexey Antonov, an analyst at Alor Broker, told the newspaper.