Join +750K new investors every month who copy stock picks from billionaire's portfoliosSign Up Free

IMF lowers Russia 2024 GDP growth forecast to 1.1%

Published 10/10/2023, 09:21
Updated 10/10/2023, 09:25
© Reuters. People walk in the Moscow International Business Center, also known as "Moskva-City" on a sunny day in Moscow, Russia May 25, 2022. REUTERS/Maxim Shemetov

(Reuters) - Russia's economy will grow by 1.1% in 2024, slower than previously forecast, the International Monetary Fund said, after significant spending and resilient consumption in a stretched labour market support growth of 2.2% this year.

Moscow plans to allocate almost a third of increased budget spending next year to defence as it diverts more resources towards its invasion of Ukraine. Reuters reported exclusively in August that Russia had doubled its 2023 defence spending target.

"The rise in growth reflects a substantial fiscal stimulus, strong investment, and resilient consumption in the context of a tight labour market," the IMF said on Tuesday in its World Economic Outlook, in reference to this year's forecast.

Russia's economy ministry expects gross domestic product (GDP) to expand 2.8% this year, bouncing back from a 2.1% decline in 2022. Analysts polled by Reuters in late September expected a 2.3% increase. In its July outlook, the IMF had forecast 1.5% growth.

But the IMF lowered its forecast from 1.3% for 2024, giving Russia the weakest projections in its list of major emerging market and developing economies, for whom average growth this year and next is seen at 4%.

Russia's economy ministry forecasts 2.3% growth next year, while the Bank of Russia's forecast range is 0.5-1.5%.

President Vladimir Putin is girding the $2.1 trillion economy for a long war and regularly touts Russia's resilience against Western sanctions.

Rising oil prices and recovering energy revenues have reduced pressure on Russia's budget deficit. The IMF said Western sanctions on Russian crude oil exports have had mixed effects, with Russian oil now trading above the $60 price cap imposed by the Group of Seven nations.

© Reuters. People walk in the Moscow International Business Center, also known as

But Russians likely face double-digit interest rates until at least 2025 and the rouble tumbled to over 18-month lows this week on foreign currency outflows. Labour is scarce, with unemployment at record lows, something Putin and the central bank have drawn attention to.

High military spending may help Russia in the short-term, but the economy's long-term prospects are bleak, economists have said, especially as areas like schools and healthcare face effective spending freezes in the years ahead.



Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.