Russia riding sanctions all the way to the bank – economy ministry

Gross domestic product is expected to expand by 2.8% this year

The Russian Ministry of Economic Development has raised its 2024 forecast for the country’s growth, citing domestic consumer and investment demand.

Gross domestic product will expand by 2.8% this year, Economy Minister Maksim Reshetnikov told a government meeting on Tuesday. This compares favorably with the previous forecast of 2.3% GDP for 2024.

“The Russian economy has not only adapted to the new external economic conditions, but has also demonstrated the ability to develop sustainably,” the ministry stated.

It identified the tightening of sanctions and a slowdown in the global economy as key external risks for the country’s growth. A potential imbalance of supply and demand, as well as labor market-related issues could also negatively affect the Russian economy, according to the forecast.

For 2025, the ministry’s GDP growth estimate remains the same, at 2.3%.

The ministry expects inflation to slow to 5.1% by the end of this year, above its previous estimate and the central bank’s 4% target.

Forecasts for real disposable incomes and retail trade have been sharply improved, with incomes seen increasing 5.2% in 2024, up from 2.7% growth in the previous forecast.

Growth in retail sales is projected to reach 7.7% in real terms this year, up from 6.4% in 2023.

READ MORE: IMF sharply raises Russia’s economic growth forecast 

Last week, the IMF significantly increased its growth forecast for the Russian economy in 2024. The Washington-based institution now expects Russia’s GDP to grow 3.2% this year, a sharp increase from its January projection of 2.6% and its October prediction of 1.1% growth. The forecast for 2025 has also been raised to 1.8% from the January figure of 1.1%.

According to the IMF, Russia’s economic growth is expected to outpace that of a number of major Western economies this year, including the US (2.7%), UK (0.5%), France (0.7%) and Germany (0.2%).

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