Outlook on certain Russian macroeconomic indicators upgraded in run-up to new budget cycle
The ministry will provide its final variant of the macroeconomic outlook through 2024 in August-September.
Russia’s Economic Development Ministry has revised a number of indicators of its outlook on the country’s social and economic development through 2024 in the run-up to a new budget cycle. Using the latest projections provided in April in drafting the new three-year budget would lead to tight budget policy with the necessity to reduce expenditures, whereas the Finance Ministry plans to normalize its budget policy starting 2022 and pursue it in accordance with fiscal rules, a representative of the Economic Development Ministry told reporters.
The ministry will provide its final variant of the macroeconomic outlook through 2024 in August-September. The revised parameters, adjusted on the basis of the results of five months of this year, have been submitted to regions, the ministry’s press service said. The deadline for submitting Russia’s draft budget for 2022-2024 to the State Duma (lower house) is September 15.
"The formation of the federal and regional budgets for three years is underway now, which is why it is very important to provide relevant macroeconomic guidelines to all participants of the budget process. Simply put, if we started the budget formation based on old projections now, we would get an extremely tight budget policy with the necessity to reduce expenditures and so on. That is why we initiated an interim adjustment of projections, the budget commission supported us," a representative of the Economic Development Ministry said. "Nevertheless, the projections are interim, we are far from answering all questions fully now as the statistics has not been released, some uncertainty remains, which is why the final outlook will be provided in late August or in early September as suggested earlier," he added.
Recovery better than expected
The Russian economy is recovering faster than expected, with its recovery potential not exhausted yet, the ministry noted. The economy is expected to return to the pre-crisis level as early as in July. "We currently have data for March, April and May in hand, we see that the economy is recovering faster than we expected <…> We expect the return to the pre-crisis level as early as this month <…> Our experts say that the potential of the economic recovery is not exhausted year," the ministry’s representative said.
The outlook on Russia’s GDP growth rates for 2021 has been upgraded to 3.8% compared with 2.9% expected in April, he said, adding that the outlook on economic growth rates for 2022-2024 remained unchanged at 3.2% in 2022 and 3% in 2023 and 2024. "The reasons of the upgrade of 2021 GDP growth outlook are clear - the improvement of the consumer and investment demand dynamics," the representative explained.
The forecast on retail trade growth has been improved for the whole period: to 6.9% from 5.1% for 2021, to 3% from 2.9% for 2022, to 2.9% from 2.8% for 2023-2024. The outlook on growth of paid services to households has also been upgraded to 14.3% from 11.3% for 2021, to 5.2% from 4.8% for 2022, and to 3.5% from 3% for 2023-2024.
Moreover, the Economic Development Ministry has upgraded its outlook on growth of investments for 2021 to 4.5% from 3.3% projected in April, leaving the forecast for the next three years unchanged. "The positive dynamics of fixed investment - we have growth by 2%, the current indicators for April-May also say that we see very strong investment results by the end of the second quarter," he said.
The ministry has not changed the outlook on growth of industrial production for this year, leaving it at 2%, whereas for future years the industrial production growth outlook has been upgraded to 3.6% from 3.4% expected in April for 2022, remained unchanged at 2.9% for 2023, and has gone slightly down to 2.7% from 2.8% for 2024.
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Russia’s Economic Development Ministry has revised a number of indicators of its outlook on the country’s social and economic development through 2024 in the run-up to a new budget cycle. Using the latest projections provided in April in drafting the new three-year budget would lead to tight budget policy with the necessity to reduce expenditures, whereas the Finance Ministry plans to normalize its budget policy starting 2022 and pursue it in accordance with fiscal rules, a representative of the Economic Development Ministry told reporters.
The ministry will provide its final variant of the macroeconomic outlook through 2024 in August-September. The revised parameters, adjusted on the basis of the results of five months of this year, have been submitted to regions, the ministry’s press service said. The deadline for submitting Russia’s draft budget for 2022-2024 to the State Duma (lower house) is September 15.
"The formation of the federal and regional budgets for three years is underway now, which is why it is very important to provide relevant macroeconomic guidelines to all participants of the budget process. Simply put, if we started the budget formation based on old projections now, we would get an extremely tight budget policy with the necessity to reduce expenditures and so on. That is why we initiated an interim adjustment of projections, the budget commission supported us," a representative of the Economic Development Ministry said. "Nevertheless, the projections are interim, we are far from answering all questions fully now as the statistics has not been released, some uncertainty remains, which is why the final outlook will be provided in late August or in early September as suggested earlier," he added.
Recovery better than expected
The Russian economy is recovering faster than expected, with its recovery potential not exhausted yet, the ministry noted. The economy is expected to return to the pre-crisis level as early as in July. "We currently have data for March, April and May in hand, we see that the economy is recovering faster than we expected <…> We expect the return to the pre-crisis level as early as this month <…> Our experts say that the potential of the economic recovery is not exhausted year," the ministry’s representative said.
The outlook on Russia’s GDP growth rates for 2021 has been upgraded to 3.8% compared with 2.9% expected in April, he said, adding that the outlook on economic growth rates for 2022-2024 remained unchanged at 3.2% in 2022 and 3% in 2023 and 2024. "The reasons of the upgrade of 2021 GDP growth outlook are clear - the improvement of the consumer and investment demand dynamics," the representative explained.
The forecast on retail trade growth has been improved for the whole period: to 6.9% from 5.1% for 2021, to 3% from 2.9% for 2022, to 2.9% from 2.8% for 2023-2024. The outlook on growth of paid services to households has also been upgraded to 14.3% from 11.3% for 2021, to 5.2% from 4.8% for 2022, and to 3.5% from 3% for 2023-2024.
Moreover, the Economic Development Ministry has upgraded its outlook on growth of investments for 2021 to 4.5% from 3.3% projected in April, leaving the forecast for the next three years unchanged. "The positive dynamics of fixed investment - we have growth by 2%, the current indicators for April-May also say that we see very strong investment results by the end of the second quarter," he said.
The ministry has not changed the outlook on growth of industrial production for this year, leaving it at 2%, whereas for future years the industrial production growth outlook has been upgraded to 3.6% from 3.4% expected in April for 2022, remained unchanged at 2.9% for 2023, and has gone slightly down to 2.7% from 2.8% for 2024.
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