The International Monetary Fund (IMF) on Tuesday raised its economic growth forecast for Russia in 2023, predicting that deficit-fueled government spending would help counter the rising costs of its war in Ukraine.
But the Russian invasion is expected to have a significant medium-term impact, with the IMF predicting that Russia’s economy will be around 7% smaller by 2027 than pre-war forecasts would have indicated, the official said. chief economist of the IMF Pierre-Olivier Gourinchas during a press conference. press briefing ahead of the release of the World Economic Outlook (WEO) report on Tuesday.
After contracting 2.1% last year, the IMF now expects the Russian economy to grow 0.7% this year, up 0.4% from a previous forecast in January.
The Russian economy is then expected to grow by 1.3% in 2024, down 0.8% from previous forecasts.
The IMF raised its forecast for 2023 after concluding that Russia had “been able to maintain some momentum in the economy by, for example, taking very strong fiscal measures” in 2022 and 2023, Gourinchas said.
“At the end of last year, a large part of this budget spending was also related to military spending,” Petya Koeva Brooks, the IMF’s deputy director in the research department, told reporters.
“But more broadly, I think Russia has used the fiscal space it has to also support the economy,” she said.
The IMF expects Russia’s budget deficit to reach 6.2% of GDP this year, according to a spokesperson. That would be almost three times the size of last year’s budget deficit.
Russia’s current account surplus is also expected to fall sharply to 3.6% of GDP this year, from 10.3% a year earlier, due to much weaker terms of trade, energy volumes weaker and a recovery in imports, the spokesman said.