Russia Improves Prognosis for GDP Growth From 2.9 to 3.8 Percent

In the run-up to a new budget cycle, Russia’s Economic Development Ministry updated a number of indicators of its prognosis on the country’s social and economic development until 2024. Using the most recent projections from April in drafting the new three-year budget would result in a tight budget policy with a need to reduce expenditures, whereas the Finance Ministry plans to normalize its budget policy beginning in 2022 and pursue it in accordance with fiscal rules, according to a representative of the Economic Development Ministry.

In August-September, the ministry will provide its final version of the macroeconomic forecast through 2024. The updated parameters, based on the outcomes of the first five months of this year, have been presented to regions, according to the ministry’s press service. Russia’s draft budget for 2022-2024 must be submitted to the State Duma (lower house) by September 15.

The prognosis for Russia’s GDP growth rates in 2021 has been improved to 3.8 percent, up from 2.9 percent in April, he said, adding that the estimate for economic growth rates in 2022-2024 has remained maintained at 3.2 percent in 2022 and 3 percent in 2023 and 2024. “The reasons for the increase in the 2021 GDP growth estimate are clear: improved consumer and investment demand dynamics,” the spokesperson stated.

The projection for retail trade growth for the entire period has been raised to 6.9 percent from 5.1 percent for 2021, 3 percent from 2.9 percent for 2022, and 2.9 percent from 2.8 percent for 2023-2024. The forecast for paid services to households has also been raised to 14.3 percent from 11.3 percent for 2021, 5.2 percent from 4.8 percent for 2022, and 3.5 percent from 3 percent for 2023-2024.

Furthermore, the Economic Development Ministry raised its projection for investment growth in 2021 to 4.5 percent from 3.3 percent in April, while keeping the forecast for the next three years constant. The good dynamics of fixed investment – we have a 2% increase, and the present indications for April-May indicate that we will have extremely solid investment results by the end of the second quarter.

The ministry has not changed its outlook on industrial production growth for this year, remaining at 2%, whereas the outlook for future years has been upgraded to 3.6 percent from 3.4 percent expected in April for 2022, remained unchanged at 2.9 percent for 2023, and has been slightly reduced to 2.7 percent from 2.8 percent for 2024.