MOSCOW, September 23, Elena Savelyeva. International institutions have again sharply improved their forecasts for the Russian economy. Thus, the OECD expects a 0.8% increase in GDP at the end of the year instead of a fall of 1.5%. For the third time in a row, the IMF has also noted positive dynamics. The Ministry of Economic Development, in turn, predicts growth of 2.8%. There was no protracted recession. Analysts state: structural transformation under sanctions is already bearing fruit.
Forecasts updated
As follows from the September report of the Organization for Economic Co-operation and Development (OECD), the Russian economy will increase by 0.8% in 2023, and by 0% in 2024 ,9. Previously, they talked about a one and a half percent reduction.
The OECD also adjusted the inflation forecast: 5.2% instead of 5.4.
The International Monetary Fund has already changed its estimates three times this year : in January they expected growth by 0.3%, now — by one and a half. In 2024 — by 1.3%.
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As the IMF explained, the indicators were revised due to “objective data” for retail trade, construction and industrial production, “which indicate a strong first half of the year.”
The Ministry of Economic Development expected 1.2%, now — 2.8.
Last year, Western institutions predicted a severe and protracted recession for Russia. However, the decline was less than in the pandemic year of 2020: 2.1% versus 2.7. They also warned about the inevitable — the lowest point will be in the first quarter of 2023, when the delayed effect of sanctions will kick in. But they were wrong here too: instead of the expected collapse of more than eight percent, the economy shrank by only 1.8.
Production growth
A deep recession was predicted, among other things, “due to forced structural transformation into a low-tech economy.” It turned out exactly the opposite. If previously Russia was more of a link in the global supply chain, now modern production for the domestic market is being developed. This was greatly facilitated by the departure of Western business.
Imports are being actively replaced by domestic companies.
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In the first half of the year, the output of computers, electronic and optical products increased by 71.6%, motor vehicles, trailers and semi-trailers — by 51.7, finished metal products — by 45.8, furniture — by 34.3, electrical equipment — by 32 ,1, clothing — by 44.
«GDP growth rates remain low, below the pre-crisis two to three percent. The main support comes from the extractive industries, industrial mining and export of raw materials, where it was possible to maintain volumes. It is also increasing domestic demand — household consumption, investment in fixed assets,” lists Vladislav Antonov, financial analyst at BitRiver.
Oil export flow
An important factor is the redirection of oil exports from Europe to Asia, mainly to China and India.
“The price of Russian Urals is currently $70-75 per barrel, despite the fact that there is an embargo and a ceiling of $60. In the second half of the year, due to this, as well as an increase in non-oil and gas revenues, the budget deficit gave way to a surplus,” notes Guzel Protsenko , General Director of Alfa-Forex.
«Logistics and cargo transportation are developing. The number of orders from shipping companies has increased after foreign oil traders refused to transport Russian oil due to fears of secondary Western sanctions,» the analyst adds.
Objective obstacles
However, there is a decline in the manufacturing industry due to problems with imports technologies and equipment. Exports of services and tourism decreased. Difficulties in the construction industry, wholesale and retail trade.
The manufacturing industry was supported by defense government orders.
Experts point out that the change in estimates occurred in May. Economic growth accelerated and continued. However, the restoration is not complete.
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“Geopolitical risks and the latest packages of Western sanctions have a strong impact on the raw materials market, and this is one of the main sources of income for the country. The duties introduced by the government show that the budget needs new drivers, but the Central Bank’s tightening of monetary policy weakens this potential,” points out Alexander Solovyov, a financial analyst at the Finmir marketplace.
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Personnel shortage
A serious limiter to further extensive growth is the shortage of labor in the real sector of the economy. The industry is faced with a personnel shortage. The country has record low unemployment, and this is slowing down the development of the economy.
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"Increasing demand for labor without increasing labor productivity can result in accelerated inflation and a drop in real growth rates of both GDP and household incomes. In the next few years, it is necessary to resolve this issue at the level of both individual enterprises and the economy as a whole,” emphasizes Alexey Nesterenko, partner at S+Consulting.
As the Higher School of Economics found out, almost all industries suffer from a shortage of personnel. Especially the automobile industry, the production of electrical equipment, and petroleum products.
According to the Ministry of Labor, manufacturing, construction, and transport enterprises, as well as the healthcare system, are in great need of employees. The agency estimates that by 2030 the economy will need 73.6 million people. Moreover, 800 thousand new workers will be needed in manufacturing, 430 thousand in science and IT, 400 thousand in transportation and storage, 285 thousand in healthcare and the social sector.