IMF lowers Russia's GDP growth forecast for 2024 to 1,1%

Według Of the International Monetary Fund Russia's economy will grow by 2024% in 1,1, slower than previously forecast, after strong spending and stable consumption in a tight labor market support growth of 2,2% this year.

Moscow plans to spend almost a third of next year's increased budget spending on defense, directing more resources to the invasion of Ukraine. It was only in August that it was reported that Russia had doubled its defense spending target for 2023.

“Economic growth reflects significant fiscal stimulus, strong investment and resilient consumption in the context of a tight labor market.” – the IMF stated in its statement on Tuesday World Economic Outlook, referring to this year's forecast.

Divergent forecasts for Russia's GDP

Russia's economy ministry expects gross domestic product (GDP) to grow 2,8% this year, returning from a 2,1% contraction in 2022. Analysts polled by Reuters in late September expected growth of 2,3%. . In its July forecast, the IMF predicted growth of 1,5%.

However, the IMF lowered its 2024 forecast from 1,3%, giving Russia the weakest forecast on its list of major emerging and developing economies, for which average growth this year and next is estimated at 4%.

The Ministry of Economy of Russia forecasts growth at 2,3% next year, while the Bank of Russia's game ranges from 0,5-1,5%.

President Vladimir Putin is preparing his $2,1 trillion economy for a long war and regularly touts Russia's resilience to Western sanctions.

The budget saves, among others: price of crude oil

Growing oil prices and rising energy revenues have reduced pressure on Russia's budget deficit. The IMF said Western sanctions on Russian oil exports have had mixed results, with the price of Russian crude now above the $60 upper limit imposed by the G7.

But Russians are likely to face double-digit interest rates until at least 2025, and the ruble fell this week to its lowest levels in more than 18 months amid foreign currency outflows. There is a labor shortage and unemployment is at record lows, a fact that Putin and the central bank have drawn attention to.

High military spending may help Russia in the short term, but the long-term outlook for the economy is bleak, economists say, especially as areas such as schools and health care face a virtual spending freeze in the coming years.