The Russian Economy’s Prospects: Experts Show Moderate Pessimism
HSE University’s Centre of Development Institute has conducted its regular quarterly survey of experts’ projections for the Russian economy in the 2020–2021 period. According to the consensus forecast, Russia’s GDP will decrease by 4.3% this year. This seems to be a more optimistic outlook compared, for example, to the IMF’s forecast, which suggests a 5.5% decline.
The survey among professional forecasters was carried out on May 6-12, 2020, involving 28 experts from Russia and other countries. The previous survey was held on April 6-7 this year.
‘The coronavirus pandemic has interrupted the economic inertia, causing dramatic changes to the expert community’s assessments of the Russian economy in the near term,’ the Centre of Development’s report says. Compared to last month’s survey, the consensus forecast for GDP decline went from minus 2% to minus 4.3%. The peak of the crisis will occur in Q2, with GDP plummeting by 10.7%. Next year, the Russian economy will likely grow by 3% (2.3% growth was expected in April). For the next five years, the growth rate is forecast within 1.8-2.3%.
It should be noted that the Centre of Development’s basic forecast suggests a GDP decline of 4% in 2020, followed by growth of 3.1% in 2021. In May, the consensus forecast looked quite optimistic compared, for instance, to the International Monetary Fund’s (IMF) estimates, whereby Russian GDP is expected to decrease by 5.5% this year. The Bank of Russia predicts a decrease within minus 4-6%.
Furthermore, the Centre of Development’s report also puts the inflation rate in Russia at around 4.7% this year (compared to 5.3%, according to the forecasts in April). ‘The inflation impact of the ongoing crisis will be more moderate. Moreover, the consensus forecast expects the Central Bank of Russia to reduce the key interest rate by another 0.50–0.75 percentage point towards the end of 2020. Therefore, the experts do not consider inflation acceleration to be a significant risk,’ the report reads.
The experts’ optimism also manifests itself in the consensus forecast, which predicts the Russian Urals oil price to reach USD 50 per barrel by 2022 and remain at this level. This is more or less comfortable for Russia in the midterm, despite the sharp global decline in oil prices and low demand.