The economy ministry said gross domestic product will contract by 4.2% this year amid sanctions over the war in Ukraine.
Russia’s economy will contract more than expected and inflation will not be as high as predicted three months ago, economic ministry forecasts show, suggesting economy is handling sanctions better than initial fears It suggests.
After Moscow sent troops to Ukraine on February 24, the economy plunged into recession, triggering significant Western curbs on the energy and financial sectors, including freezing Russian reserves held abroad, resulting in a number of It urged Western companies to withdraw.
But almost six months after Russia launched what it calls a “special military operation,” the recession has proven less severe than the economy ministry predicted in mid-May.
Russia’s Gross Domestic Product (GDP) will contract by 4.2% this year, and real disposable income will fall by 2.8% compared to declines of 7.8% and 6.8% respectively three months ago.
At one point, the ministry warned that the economy was on a contraction trajectory of more than 12%.
The ministry now expects inflation to end 2022 at 13.4% and the unemployment rate at 4.8%.
However, the 2023 GDP forecast is more pessimistic, contracting by 2.7% compared to the previous forecast of 0.7%. This is in line with central bank views that the recession will last longer than previously thought.
The economy ministry removed price forecasts for Russia’s main export, oil, from the August data set and did not give reasons for revising the forecasts.
The projections will be reviewed by the government’s budget committee and then by the government itself.