(Finance) – The Russian Central Bank estimates that the Russian economy will contract in 2022 (at a level between -6% and -4%) and for most of 2023 (bringing the annual decrease between -4% and -1%), adapting to changed external conditions. Recovering in 2024, the institute expects the economy to return to its potential growth rates of 1.5–2.5% in 2025.
“The long-term growth rate of the economy will be determined by the improvement of work skills and the greater efficiency of capital consumption, by availability of modern technologies and equipment and the investment climate “, explained Alexey Zabotkin, Deputy Governor of the Bank of Russia, during the presentation of a report on monetary policy for 2023-2025
Given the monetary policy pursued, inflation annual rate will be 12-15% in 2022, will decelerate to 5-7% in 2023, will return to 4% in 2024 and will remain close to the target in the following years.
The Bank of Russia predicts that the key interest rate it will be between 10.5% and 10.8% per annum in 2022, between 6.5% and 8.5% per annum in 2023 and between 6% and 7% per annum in 2024. By 2025 , the central bank will bring the key rate back to its neutral long-term range (which is estimated to be between 5% and 6%).
The Bank of Russia will also consider fiscal policy measures in the decision-making process on key rates, as well as in drafting macroeconomic forecasts. “THE principles of the new budget rule are being developed. The extent of its countercyclical influence on the economy will depend on the configuration of the budget rule. The Bank of Russia will evaluate fiscal policy measures in the preparation of the macroeconomic forecast and in making decisions on the key rate “, the document reads.