Moscow (EFE).- The Central Bank of Russia (BCR) today maintained the interest rate at 7.5%, while improving its projections for the Russian economy, calculating that this year the recession could be up to three points less strong than anticipated and even including the possibility of growth despite Western sanctions.
The entity led by Elvira Nabiúlina indicated after a regular meeting of the board of directors of the BCR that, taking into account the structural transformation of the Russian economy, a drop in GDP of up to 1% or growth of up to 1% is expected in 2023.
Russia, which is in recession after suffering unprecedented sanctions last year for its military campaign in Ukraine, closed last year with a contraction of 2.5% of its GDP, better than expected by the government itself.
Already in 2024 the Bank of Russia calculates that there will be a growth of between 0.5% and 2.5%, while in 2025 the advance of Russian GDP may be between 1.5% and 2.5 %.
In its latest macroeconomic forecasts last October, the Russian monetary institution still predicted a contraction of the economy of between 4% and 1% in 2023, and predicted growth of between 1.5% and 2.5% both in 2024 like in 2025.
The Russian Ministry of Economic Development forecast in its latest macroeconomic forecast a fall of 0.8% of GDP this year, before picking up and growing again to around 2.6% in 2024 and 2025.
The IMF upgraded its outlook for Russia
The International Monetary Fund (IMF) considerably improved its outlook for Russia in January, stating that the Russian economy will fall 0.3% in 2023, 2.6 points less than initially expected.
The BCR maintains that the preliminary data for the end of 2022 and the beginning of 2023 “suggest that the trends of business and consumption activity, as well as those of foreign trade, are evolving better than anticipated by the Bank of Russia in October.”
However, the BCR acknowledges that the capacity for production expansion in the Russian economy is currently limited.
The monetary institution attributes this factor to a large extent to the situation in the labor market, since “unemployment continues to be close to its historical minimum.”
“Labor shortages are increasing in many industries amid the effects of partial mobilization” that Russian President Vladimir Putin decreed last September for some 300,000 men of military age to fight in Ukraine, and “a general increase in corporate demand for workers.
“Under these conditions, labor productivity growth may lag behind real wage growth,” the Bank of Russia warned.
The BCR also maintained the interest rate at 7.5%, after verifying that year-on-year inflation only fell by one tenth in January after standing at 11.9% in December.
“Current rates of price growth are rising, having accelerated since early 2023. Increased inflationary pressures are partly due to volatile components, especially fruit and vegetable prices, and also the weakening of the ruble in late 2022,” he said.
However, in terms of stable components, current price growth rates remain subdued, he added.
The Bank of Russia estimates that annual inflation will be between 5.0% and 7.0% in 2023.