The European Bank for Reconstruction and Development (EBRD) has revised its economic forecast for Russia, anticipating growth in 2023, primarily attributed to rising oil prices. Previously, the bank had predicted a contraction of 1.5 percent, but it now expects the Russian economy to grow by 1.5 percent in 2023.
The EBRD also highlighted that the economic outlook for 2024 is contingent on the developments in the Ukraine conflict and related economic sanctions. The bank’s projection for 2024 currently stands at 1.0 percent growth.
In explaining the change in its forecast, the EBRD noted that earlier in the year, it had anticipated that Western sanctions against Russia, including a cap on oil exports, would have a more significant impact on constraining the country’s economic growth.
However, Russia’s oil revenues have been buoyed by rising global oil prices, and the country has managed to offset the cap’s impact by exploring new markets, particularly in China and India. The bank also cited the resilience of Russia’s economic activity, including robust household consumption and government spending related to ongoing conflicts.
Russia’s central bank had previously forecasted economic growth between 1.5 and 2.5 percent for 2023 and between 0.5 and 1.5 percent for 2024, acknowledging challenges such as labor shortages, sanctions, and lower export revenues.
The EBRD also provided an economic outlook for Ukraine, predicting a 1.0 percent growth rate for 2023, driven by the resumption of business operations and improved energy supply. The bank maintained its forecast of 3.0 percent output growth in 2024, assuming the conflict in Ukraine continues at its current intensity.
The EBRD, established in 1991, initially focused on assisting former Soviet bloc nations in transitioning to free-market economies. It has since expanded its reach to include regions in the Middle East and North Africa.
The bank noted that economic growth in its regions is expected to average 2.4 percent for the current year, with a projected acceleration to 3.2 percent in 2024 as inflation eases.
The bank’s chief economist, Beata Javorcik, highlighted diverging growth patterns among EBRD regions, with Central Asian economies demonstrating robust growth, while Central European and Baltic states face weaker performance due to factors such as energy prices, inflation, and shifting trade patterns.
The EBRD’s forecasts did not account for the recent earthquake in Morocco, and the bank will likely continue to monitor global economic developments to refine its projections.