The Russian economy is expected to shrink by 8 to 10% in 2022, according to new estimates from the Russian Central Bank.
It said economic activity began to decline in March 2022, after Russia invaded Ukraine and sanctions were imposed. The bank said there has been a contraction in consumer and business activity, and a decline in imports and exports.
It said businesses in Russia are now experiencing considerable difficulties in production and logistics. In a statement, the bank said: “The external environment for the Russian economy remains challenging and significantly constrains economic activity.”
Earlier this month, the World Bank predicted that Russian GDP would contract by 11.2% in 2022 while last week, the IMF forecast a contraction of around 8.5% this year.
The Central Bank said the Russian economy will not start to recover until the end of 2023. In its statement, it said: “In 2023, the Russian economy will begin growing gradually amid a structural transformation.
"In 2023 Q4, output will be up by 4.0 to 5.5% on the same period in 2022. However, the overall GDP change in 2023 will be within the range of (-3.0)-0.0%”
The forecasts came as the Central Bank cut Russian interest rates from 17% to 14%. It said slowing consumer activity and the recovery in the ruble has eased the rate of inflation in the country slightly.
Price increases are still expected to remain high though, the bank is now forecasting inflation of 18 to 23% in 2022, slowing down to 5-7% in 2023, CNN reports.
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