London bank upgrades Russian GDP growth forecast

Russia’s gross domestic product (GDP) may grow 1.7% this year, UK-based Barclays bank analysts predicted in their weekly economic outlook. According to the report, “active policy support” is helping the Russian economy to grow despite the pressure of Ukraine-related Western sanctions.  

Analysts said the fiscal stimulus and lending growth are making for “a faster-than-expected economic recovery, driven largely by domestic demand.”

They warned, however, that the Bank of Russia's recent key rate hike and risks of further tightening of monetary policy, along with new sanctions and logistical problems, still “pose downside risks for growth in the near term.”

On August 15, the Russian regulator raised the key rate to 12% due to the weakening of the Russian ruble against the dollar and the euro. Russian Finance Minister Anton Siluanov said at the time that the deterioration of the ruble was primarily due to changes in the country’s trade balance and strong demand for foreign currency amid the summer holiday season.  

In late August, Siluanov predicted the country’s economy would grow by 2.5% by the end of 2023 and “maybe even higher,” fully recovering from the sanctions-related economic decline the country saw in 2022.  

Other reports also paint a favorable outlook for Russia's economy. According to a recent World Bank report, Russia moved into the world’s top five largest economies in 2022 based on purchasing power parity (PPP), outpacing the EU’s largest economy, Germany. 

Both the World Bank and the IMF recently raised their forecasts for Russia, predicting that the country’s GDP would continue to grow amid strong trade and industrial production and higher-than-expected energy revenues.

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