The regulator expects the country’s GDP to grow by up to 2% this year and return to 2021 growth levels next year
The Bank of Russia kept its key rate unchanged and improved the country’s economic growth forecast at a regulatory meeting on Friday.
The policy rate was kept at 7.5% amid falling inflation and lower inflation expectations, as well as rapid growth in economic activity. The rate has remained unchanged since September of last year.
“Economic activity is growing faster than the Bank of Russia assumed in its February forecast. This reflects both an expansion of domestic demand and the ongoing transformation processes of the Russian economy… Growth in domestic demand supports an improving business climate despite still difficult external conditions,the regulator said in a statement.
The central bank has also upgraded its inflation forecast for 2023. It previously predicted a rise in prices of 5-7%, but now anticipates a more moderate rise of 4.5-6.5%. Expectations for 2024 remained unchanged at 4%.
“Current rates of price growth have increased since the end of 2022 but remain subdued, including in the stable components of inflation. Household inflation expectations are down. However, they remain high, as do company price expectations,” It said.
The regulator noted that it now expects Russia’s economy to grow by up to 2% this year as the country becomes accustomed to operating under tougher Western sanctions. Under the previous scenario in February, the regulator forecast a change in GDP of minus 1% to 1% for the year. GDP growth forecasts for 2024 and 2025 remained unchanged at 0.5-2.5% and 1.5-2.5%, respectively.
IMF cites weak Western sanctions against Russia
“This means that by the end of 2024 the Russian economy will reach the level of the end of 2021added the regulator, referring to the period leading up to the start of the Russian military operation in Ukraine and the Western sanctions that followed.
For more stories on economics and finance, visit RT’s business section
You can share this story on social media: