Despite the change, the exit of Western companies could still hurt the country’s economy in the long run, the body warned.
The International Monetary Fund (IMF) has raised its growth forecast for the Russian economy in 2023 in its World Economic Outlook report released on Tuesday.
Russia’s GDP is expected to grow by 0.7% this year, an upward revision from the 0.3% increase forecast by the IMF in its January report.
According to IMF chief economist Pierre-Olivier Gourinchas, Russia was “capable of maintaining a certain momentum in the economy by taking, for example, very strong fiscal measures.”
Despite the upward revision for the current year, the organization lowered its GDP growth forecast for Russia in 2024 to 1.3% from 2.1% previously, expecting shortages of workforce and the exit of Western companies affect economic growth. According to the report, the unemployment rate in Russia was 3.9% at the end of 2022. While analysts expect it to fall to 3.6% in 2023, it is expected to rise to 4.3% the next year. next year.
“An exodus of multinationals, a loss of human capital, isolation from global financial markets and restricted access to advanced technological goods and know-how will hamper the Russian economy,” he added. said an IMF spokesman, quoted by Reuters.
He also warned that the Russian economy would be at risk if the terms of trade deteriorated due to new sanctions, which would lead to a drop in the current account surplus and tax revenues.
“The latter means that the authorities will either have to cut spending or find ways to finance significantly higher deficits,” added the spokesperson.
Russia’s budget deficit was 2.4 trillion rubles ($29.2 billion) in the first quarter, compared to a surplus of 1.13 trillion rubles ($13.7 billion) in 2022, while the he current account surplus fell about 73% year-on-year to $18.6 billion. Both changes were prompted by heavy spending and lower energy revenues, analysts said.
Earlier, the official forecast of the Ministry of Economic Development predicted a decline in Russian GDP by 0.8% in 2023 and a return to growth in 2024 at 2.6%. The Bank of Russia also recently revised GDP momentum to -1%/+1% this year, up from its October forecast, which called for an economic contraction in the range of 1-4%. The regulator is expected to issue an update to the medium-term macroeconomic forecast later this month.
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