Analyst Belyaev identified the vulnerabilities of the Ministry of Economic Development's forecast
The Ministry of Economic Development presented a scenario for the development of the Russian economy, calculated until 2027. It assumes moderate GDP growth, a stable increase in household incomes and a gradual weakening of the ruble. In general, the forecast looks quite realistic. Perhaps the only question that raises questions is the inflation rate, which, according to the forecast, should return to 4% next year. I would like to know how in such a magical way, if now it is almost twice as high, and consumer prices continue to creep up little by little from month to month? Maxim Reshetnikov’s department does not give an answer.
The basic version of the forecast is a target for the government and assumes GDP growth of 2.8% this year and 2.3% (that is, more moderate) in 2025. According to the Ministry of Economic Development, such dynamics will be achieved by increasing domestic demand and consumer activity, wages and social spending, as well as increasing the volume of budget injections and private investment. Among the risks mentioned in the document are: a slowdown in the global economy, in particular, the main trading partners of the Russian Federation, sanctions pressure, and a shortage of personnel in the domestic labor market.
Real disposable income of the population is expected to increase in 2025 by 3% (real wages by 2.8%), inflation will drop to the desired 4%, and the ruble to dollar exchange rate will overcome the 100 mark by the end of the year and will continue to decline. The main motive sounded in the Ministry of Energy’s report is that the economy has all the prerequisites for further sustainable development. And here a fundamental discrepancy arises with the recent statement of the Central Bank, according to which the economy “deviates upward from the trajectory of balanced growth.” That is, the regulator points to ongoing “overheating” — a situation where demand (consumer and business) is outpacing supply, and the potential for GDP growth is hitting its ceiling.
“To assess the reliability of forecasts from the Ministry of Economic Development, it is necessary to analyze the key indicator – GDP growth,” says Mikhail Belyaev, Candidate of Economic Sciences. – An increase of 2.3% in 2025 is absolutely not enough to consider economic dynamics suitable for the successful development of closely related parameters. In this sense, the forecast is close to pessimistic. Nominal incomes of the population are increasing due to rising wages in the military-industrial complex, at industrial enterprises, and in the construction sector. However, the situation with real incomes is more complicated, since consumer prices intervene in the matter.”
And here the analyst sees the main weakness of the government forecast. In his opinion, there is no reason to believe that inflation today is decreasing, gradually approaching the Central Bank target of 4%. It is due to non-monetary factors, in particular, rising prices for imports, rising budget expenditures, and monopolization of prices by producers. This means that no miraculous monetary policy of the Central Bank can suppress it: raising the key rate over and over again (7-8%, not 16%, is acceptable for economic development) only stifles the economy, depriving loans and investments. As for the national currency exchange rate, in conditions of high inflation it a priori cannot be stable. According to Belyaev, by the end of May the dollar will reach a level above 94 rubles, and subsequently will reach 100. And even the mandatory sale of foreign currency earnings by exporters (the requirement has been extended until the end of the year) will not stop the devaluation trend, since the measure only smoothes out fluctuations around the base indicator , but does not prevent its growth.
“The forecast for real incomes of the population in 2025 (an increase of 3%) is close to the truth,” believes financial analyst and private investor Fedor Sidorov. — Budgetary injections into a number of production areas continue, spending on social services remains high. In addition, the Ministry of Economy assumes that citizens will distribute growing incomes between consumption and savings. Given the attractive interest rates on bank deposits, I believe that it will happen. As for achieving inflation targets of 4%, everything is somewhat more complicated. Let’s say that the level of investment activity can be increased by 2.3–2.7%, as Reshetnikov’s department believes. But this will also accelerate consumer prices. Probably, in the next year and a half, the Central Bank will maintain a high rate, since now it is actually hostage to the basic forecast of the Ministry of Energy.”
As a result, Sidorov argues, the ruble exchange rate will also be stormy. In many ways, the positive forecast for the Russian economy is now based on excess income from oil and gas exports, which, in turn, is ensured by the worsening situation in the Middle East. At the same time, experts do not rule out that in the next three years, prices for the domestic Urals variety will drop to $65 per barrel — and this will already noticeably affect the state of the federal treasury. “The economy will continue to overheat due to high import levels with limited exports and a reorientation towards domestic demand. This will be the determining factor in the trend towards a weakening of the national currency,” the expert concludes.