World Bank raises estimate for Russian economic growth

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The World Bank has raised its growth forecast for the Russian economy based on revised figures published on Tuesday. 

According to Global Economic Prospects 2024, Russia’s GDP will grow 2.9% this year and 1.4% in 2025. This is an upward revision from its previous projection of 2.2% and 1.1% growth, respectively.

The World Bank added that the Russian economy outperformed expectations in 2023, with growth picking up to 3.6% last year, a sharp increase from its January prediction of 2.6% and October projection of 1.6%.

“The upgrade largely reflects stronger-than-expected private demand, supported by subsidized mortgages, fiscal measures, and a tight labor market,” the institution wrote, noting that increased military expenditures have also boosted activity.

It further stated that “while the carry-over from strong growth in late 2023 and the beginning of 2024 is expected to boost activity throughout 2024, the anticipated tightening of macroprudential measures and the scaling back of the provision of subsidized mortgages are set to temper private demand.” 

The report also pointed out that Russia’s trade ties with China have grown; more transactions are being conducted in the Chinese yuan amid Moscow’s ongoing ‘pivot’ to the East.

According to Russian President Vladimir Putin, the country’s economic growth exceeds the global average. In an address to the St. Petersburg International Economic Forum (SPIEF) last week, Putin said that Russian GDP expanded by 3.6% last year, bouncing back from a 1.2% downturn amid Ukraine-related sanctions in 2022. This year, the economy has continued to expand, he stated, adding that the growth has largely been driven by non-resource sectors.

In April, the International Monetary Fund (IMF) said it expects the Russian economy to grow faster than all advanced economies in 2024. According to its projections, the country’s GDP is forecast to expand by 3.2%, exceeding the expected growth rates for the US (2.7%), the UK (0.5%), Germany (0.2%), and France (0.7%).

Russian Finance Minister Anton Siluanov earlier said he expects GDP growth in 2024 to equal that of last year, while the Bank of Russia has put it at 2.5–3.5%.