/ world today news/ The International Monetary Fund raised its forecast for Russia’s GDP in 2024 from 1.1 to 2.6%. Domestic institutions are not so optimistic: the Ministry of Economic Development expects an increase of 2.3%, and the Central Bank – 0.5-1.3. Whose calculations are correct?
The IMF again revised its forecast for the growth of the Russian economy: in the January report, the prospects for 2024 were overestimated from 1.1 to 2.6%. Expectations for next year have also increased, although only by 0.1 points – to 1.1%. At the same time, the expected drop in world oil prices was reported.
The dynamics is explained by the intensification of the military-industrial complex and the growth of private consumption due to an increase in the real income of the population. Russia became one of three G-20 countries where wages increased. The other two are Brazil and China. Moreover, domestic production did not decrease last year. Russia’s performance saw the benchmark for emerging market countries and developing countries in Europe improve from 2.7 to 2.8%.
Last October, the department already corrected the calculations for July at the end of the year – from 1.5 to 2.2%. As a result, in just ten months of 2023, Russian GDP increased by 3.2%. The head of the Ministry of Economic Development Maxim Reshetnikov points to the West’s misunderstanding of the structure of the local economy. “Everyone is looking in the rear-view mirror and economic processes have significantly transformed, transport is being reoriented, business has shown flexibility,” he says. Affordable resource prices provide the country with a stable position in world markets, while the US tries to impose its expensive products to the detriment of the interests of other countries.
In the Eurozone, the IMF expects a slowdown in growth rates – from 1.2 to 0.9%. This is related to the rising energy prices and the decrease in trade turnover with Russia. The general director of “Alfa Forex” Guzel Protsenko emphasizes: the West itself has abandoned a huge market. Moscow is switching suppliers as it is forced to respond to sanctions. Before there were Polish apples and Spanish oranges on the store shelves, now there are Serbian and Egyptian fruits. “Russia has proven that it knows how to scale its economy, while Europe, which is already slow and quite conservative, cannot recover. Europeans still do not have the consciousness and understanding that it is time to change the structure,” explains the expert.
Western experts note that countries with the largest economies have not experienced the expected drop in inflation due to harsh working conditions and strain on supply chains. The conflict in the Middle East has forced seven of the ten major shipping companies to stop Red Sea transit, and traffic through the Panama Canal has dropped by a third due to landlocked and shallow waterways. About 30% of all cargo is transported by sea, any disruption brings big losses to companies, and the need to go around Africa due to Houthi attacks on ships leads to additional costs and increases the price of already expensive European goods.
The IMF believes that financial difficulties will provoke further tightening of monetary policy and a decline in asset prices. In the future, this will lead to adverse consequences for trade and economic growth, a withdrawal of capital into more reliable assets and a strengthening of the US dollar.
However, not everyone shares the IMF’s opinion, at least with regard to the Russian economy. The forecasts of local economists are much more modest. The Ministry of Economic Development expects growth in 2024 to be 2.3%, and the Central Bank – only 0.5-1.3% in 2024 and 1-2% in 2025.
Financial expert Andrey Vernikov considers the figure of 2.6% too optimistic. “The IMF made a mistake last year and is now signaling by overestimating fiscal stimulus,” he notes. The problem is that it is impossible to increase budget expenditures at the same pace, which means that GDP growth cannot be that high, the expert is convinced. Moreover, the expected drop in oil prices by 2% in real terms may turn out to be more significant. Limited production capacity will also have a negative impact. “In many industries we have already reached the limit and it takes about six to seven years to build a new plant. The prime interest rate of over 10% also has a deterrent effect. Therefore, the data from the Central Bank is the closest to the truth. In fact, this year the economy will stand still in one place,” says Vernikov.
In turn, economist Andrey Loboda explains that the Central Bank’s forecast has simply not been updated yet. The regulator is likely to have accepted lower oil tariffs and factored into the forecast the impact of key interest rate hikes, which will be noticeable in 2024, so in all forecasts GDP growth is expected to be lower this year , than in 2023. “The IMF report is fresher, so it is better. And Rosstat’s assessment of GDP growth will be published in mid-February, based on these figures, Russian departments will revise the calculations si”, explains the expert.
Protsenko recalls that the Central Bank of the Russian Federation is usually cautious in its assessments and never rushes to praise achievements in the economy, its task is another – to support the ruble. And the Ministry of Economic Development uses a system of indicators that is different from the Central Bank. Hence the difference in assessments of the “health” of the country’s economy.
Translation: V. Sergeev
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