Daily Management Review

Russia Predicts Its Economy Shrinkage In 2020 Will Be Lower Than 3%


Russia Predicts Its Economy Shrinkage In 2020 Will Be Lower Than 3%
According to Russia’s First Deputy Prime Minister Andrei Belousov on Monday, the economy of the country is expected to shrink by less than 3 per cent in 2022, which would mark a much smaller contraction compared to what was being anticipated previously. The government also predicted that inflation will be lower than previously projected.
The Russian economy suffered as a result of broad Western sanctions imposed in response to Moscow's decision to send tens of thousands of troops into Ukraine on February 24. However, the economic fallout has not been as severe as initially anticipated. more info
Belousov predicted that Russia's GDP would fall by "a little more than 2 per cent" this year, followed by a "no more than 1 per cent" drop in 2023.
The recent string of projections from the Russian economy ministry in mid-August posited that the country's GDP would shrink by 4.2 per cent in the current year, after previously warning about a possible fall of the economy of more than 12 per cent - which would have been the largest fall in economic output for the country since the mid-1990s crisis following the collapse of the Soviet Union.
Even though there have been unprecedented sanctions imposed on Russia and a large number of foreign firms exiting the Russian market, the government said that it witnessed no signals of the labor market deteriorating, according to Belousov, even though there were risks that it might.
According to the Eikon database, the unemployment rate was 3.9 per cent in June, the lowest since the statistics service began publishing the figure in 1992.
According to Belousov, full-year inflation will be 12-13 per cent, down from a 20-year high of 17.8 per cent in April following the fall in the rouble to a record low.
Non-commodity exports will fall by 17 per cent this year as Russia loses access to European markets, Belousov said during a televised government meeting. Consumer goods imports, on the other hand, have nearly recovered as a result of new trade routes and parallel imports.
"Imports are a key issue, since limiting imports is one of the tools, the levers of the whole logic of sanctions on our country," he said.
Russia has incorporated a wide range of products from foreign automakers, technology firms, and consumer brands in the parallel imports scheme, which is intended to protect consumers after regular imports have declined.
Investment imports have suffered the most, according to Belousov, who predicts a drop of up to a fifth this year.
"The situation remains quite difficult due to both restrictions on imports of investment equipment and other sanctions," Belousov said, predicting the decline in capital investment to reach its maximum level in the fourth quarter this year and early next year.