MOSCOW, December 28 The Russian economy broke several records in the past year, which became both a reason for pride and a challenge for the country. collected 10 main events in the domestic economy that will have important consequences in the future.
1. Growth instead of collapse
The official forecast for Russian GDP growth in 2023 from the Ministry of Economic Development is 2.8%, from the Central Bank — 3%, but President Vladimir Putin has already said that the final figure will exceed all expectations and amount to 3.5%. The main drivers were manufacturing, construction and agriculture, as well as high consumer demand.
At the same time, initially the authorities saw their task as even to at least prevent a collapse. “There was a threat of a collapse. And we really had to mobilize all resources, internal forces in order to prevent this collapse,” presidential press secretary Dmitry Peskov said in November.
The main challenge for next year is to maintain growth and prevent the economy from overheating.
2. Record unemployment
Unemployment in Russia in the past year turned out to be record low — in October it reached 2.9% of the economically active population. This is one of the lowest rates in the world.
But this creates problems for business, because the labor needs of enterprises are only growing. For people, this means increasing salaries in those areas where there is the greatest shortage of personnel. And the need for retraining and advanced training is in the rest.
In conditions of low birth rate, Russia will also have to attract migrants. However, the authorities admit that guest workers will not solve the problem. The main challenge is to increase labor productivity.
3. Fatal Eggs
The President, summing up the results of the year, said that inflation in Russia could be higher than 7.5%, closer to 8%, but the authorities assume that it will be possible to return it to the target of 4%.
To achieve this goal, the Central Bank is pursuing a tough policy, raising the key rate to 16% by the end of the year. And he plans to keep it at this level until the middle of next year.
The government, in turn, is taking targeted measures in individual markets. Thus, due to the record soaring prices for eggs, at the end of the year the duty on their import in the amount of up to 1.2 billion pieces was reset to zero.
4. Fuel crisis
Russia experienced a real fuel crisis in 2023: stock prices for gasoline and diesel have been rising since the spring, in September they broke historical records, and fuel shortages arose in a number of regions.
This situation has arisen due to rising prices for oil and petroleum products on the world market, as a result of which their exports have become more profitable than supplies to the domestic market. At the same time, the Ministry of Finance decided to adjust the damper mechanism, which was supposed to level out the situation, by halving payments to oil workers from the budget.
As a result, the government took an extreme measure — a complete ban on fuel exports. Prices crept down, and relief began for exporters. The Ministry of Finance returned the damper a month after it was adjusted. But to prevent the crisis from repeating itself, the authorities will have to look for new solutions.
5. Exchange control to stabilize the exchange rate
The Russian ruble exchange rate spent 2023 in an almost continuous decline against the main currencies traded on the Moscow Exchange. Against this background, the Central Bank and the Ministry of Finance started a dispute about the need to introduce currency restrictions in Russia.
But when in the fall the dollar rose in price against the ruble by almost one and a half times compared to the end of last year, to a maximum for the entire 2023, exceeding 102 rubles at the moment, the authorities introduced currency control measures, including requirements for the mandatory sale of foreign currency earnings for exporters.
The measures worked: in December the exchange rate stabilized around 90 rubles per dollar. But now the question is what will happen next spring, when the temporary currency restrictions end.
6. Record budget expenditures
Russian budget expenditures for 2023 reached a historical record and amounted, according to preliminary estimates by the Ministry of Finance, to 32.2 trillion rubles against the plan of 29 trillion rubles.
Budget revenues, both oil and gas and non-oil and gas, also turned out to be higher than expected, thanks to which the Ministry of Finance managed to maintain the stability of public finances. The budget deficit at the end of the year is expected to be less than 1.5% of GDP instead of the projected 2% of GDP.
The priority of spending is, of course, defense and security. But we haven’t forgotten about investments in infrastructure, including from the National Welfare Fund. The Ministry of Finance expects that at the end of the year the volume of the National Welfare Fund will amount to 11.9 trillion rubles, of which free funds not invested in projects will amount to 4.7 trillion rubles.
7. Excess profit tax
Large businesses, which made good money in 2021-2022 due to favorable external conditions, had to share the excess profits received with the budget. Companies can choose to pay in 2024 10% of the excess profits received during these years, or in 2023 — a security payment of half this amount.
Most companies chose the second option. At the same time, treasury revenues from the payment have already exceeded the expectations of the Ministry of Finance and amounted to 315 billion rubles.
But businesses did not like the experience of introducing such one-time payments. The head of the Russian Union of Industrialists and Entrepreneurs, Alexander Shokhin, said at a meeting with the President of the Russian Federation that business is even ready to increase the income tax, but on condition that the tax policy is more predictable.
8. Hunting for gray bloggers
This year, the Tax Service surprised Russians with high-profile cases against millionaire bloggers. What was impressive was not the number of such cases, but the amount of claims for non-payment of taxes on income from the sale of educational courses, trainings and marathons. They reached hundreds of millions of rubles for each defendant, and in some cases reached a billion.
The digital transformation of the economy and the tax system dictates new playing conditions for business, and the main one is transparency.
In the context of fiscal consolidation, fiscal authorities are very attentive to administrative issues. In the coming years, this trend will only intensify, and entrepreneurs who are accustomed to working “all in” must draw their own conclusions.
9. Voluntary restrictions
In 2023, Russia proposed to OPEC+ a new format for regulating the global oil market — voluntary production cuts, and was the first to assume additional obligations beyond its quotas. The initiative was supported by Saudi Arabia, and then by many other members of the alliance.
OPEC+ is cutting oil production in 2023, setting quotas by 2 million barrels per day below the August 2022 level. From the beginning of 2024, quotas will be reduced by another 1.4 million barrels per day. At the same time, the total voluntary reductions above quotas amount to 1.66 million barrels per day, they are valid until the end of 2024. And there are also voluntary additional cuts — Saudi Arabia is cutting production by 1 million barrels per day, and Russia is cutting exports by 300 thousand.
This allowed exporting countries not only to maintain market balance, but also to earn money. According to the head of the RDIF, Kirill Dmitriev, the OPEC+ deal has already brought the Russian budget an additional 30 trillion rubles — this is more than Russian assets frozen abroad.
10. Record sanctions
The sanctions pressure on Russia has already crossed any reasonable boundaries: State Duma Speaker Vyacheslav Volodin counted 18,772 illegal restrictive measures in force against the Russian Federation.
The most high-profile decision of this year was made by the EU and G7 countries in December, including a ban on the import of Russian diamonds in the 12th package of sanctions. However, the market is confident that this measure will not work, just as the price ceiling on Russian oil introduced in 2022 did not work — the Russian budget continued to collect record revenues.
The only obvious consequence of the sanctions is the growth of cooperation and trade between Russia and friendly countries, as well as the transition of payments to national currencies. Customs authorities are recording record trade turnover with India, Iran, Turkey, and, of course, China, whose auto industry has already taken a leading position in the Russian market.
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