The fund said in its latest forecast that the Russian economy will grow this year by 0.7 percent, more than the rate it expected in its previous report 3 months ago, which amounted to 0.4 percent on that day.
Indeed, the International Monetary Fund’s forecasts for the Russian economy keep improving with each report it publishes.
Last year, the Fund expected that the Russian GDP in 2022 would record a sharp contraction of 6 percent, but the result was completely different, as it was found at the end of the year, according to the Fund, that the Russian economy contracted by “only” 2.1 percent.
As for 2023, the situation looks even better: last October, the International Monetary Fund expected the Russian economy to contract this year by 2.3 percent, before giving its updated report in January a more positive picture as it expected that the Russian GDP in 2023 would grow by a slight rate of 0.3 percent. percent.
And it was only three months until the IMF raised its level of optimism about the performance of the Russian economy, expecting in its report issued on Tuesday that the Russian GDP in 2023 would grow by 0.7 percent, which is three percentage points better than what it had forecast just six months ago.
Commenting on these expectations, Pierre-Olivier Gorinchas, chief economist at the International Monetary Fund, said during a press conference, “Russia managed to maintain momentum (for 2022) by taking very strong fiscal measures last year, which we expect to continue this year.”
In fact, the Russian state has dramatically accelerated public spending, ending 2022 with a deficit of 2.2 percent of GDP, despite the large revenues generated by the treasury thanks to oil and gas sales, whose prices have risen sharply.
“I think Russia used the fiscal space that it had to prop up its economy,” Petya Kueva-Brooks, deputy director for research at the International Monetary Fund, told the press conference. “But a large part of its budget expenditures are actually military expenditures.”
The public deficit is supposed to swell further this year. The International Monetary Fund expects that Russia’s public deficit in 2023 will reach 6.2 percent.
“This is an enormous proportion by Russian standards,” a spokesman for the fund said.
He added that the current account surplus will necessarily decline in 2023 to 3.6 percent of GDP, compared to 10.3 percent in 2022, with much weaker trade conditions and a decline in energy volumes.
Indeed, the repercussions of the war will show clear scars on the Russian economy in the long run.
“By 2027, we expect the Russian economy to be 7 percent smaller than it would have been had the war not happened,” Gorinchas said.
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