S&P upgrades Russia’s economic growth outlook for 2021

International rating agency S&P has improved its outlook for Russia's GDP growth this year to 4% from its previous forecast of 3.7%, according to a survey released on Tuesday.

The document, focusing on emerging markets, also gave a forecast for Russia’s GDP in 2022 and 2023, with the agency's analysts expecting the country’s economy to grow by 2.6% and 2% in the next two years, respectively.

The agency sets Russia’s inflation at 6.1% in 2021, but predicts it to drop to 4.2% next year. According to the survey, the country’s central bank key interest rate will reach 7% per annum in 2021, up from the current 6.75%.

Analysts expect Russia’s ruble exchange rate against the US currency to stop at 72 rubles per dollar at the end of the year, but to gradually weaken to 77.5 rubles per dollar by 2024.

The unemployment rate in the country is expected to be 4.9% this year, but fall to 4.6% in three years’ time.

The agency also gave an outlook for the emerging countries in Europe, the Middle East and Africa, predicting an upward trend in GDP growth throughout, primarily driven by increased consumption and exports. However, analysts noted that inflation in European states with emerging markets would continue to rise, pressured by higher fuel and food prices and supply chain disruptions as the result of accelerating economic growth. The agency warned that the two main risks to economic growth emerging economies are facing include inadequate vaccination and a faster-than-expected normalization of US monetary policy.

Fitch ratings agency also recently improved its forecast for Russia’s economic growth in 2021, with a slightly higher figure of 4.3%. Meanwhile, according to a recent statement by Russian President Vladimir Putin, the country’s economy has this year completely overcome the economic decline caused by last year’s Covid-19 pandemic.

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