Page 20 - Russia OUTLOOK 2023

Construction growth accelerated in October and was 10%. Construction was
driven by things other than residential construction, as residential construction
shrank by 11% y/y.

The extractive industry contracted in October by 3% y/y. Crude oil production
continued the fine contraction seen in recent months. Natural gas production
levelled off in October, but throughout this year it has contracted sharply.

On November 2, the Central Bank of Russia (CBR) published its “Main
directions of unified state monetary policy for 2023 and the period of 2024
to 2025.”

In this document, the CBR forecasts the development of the Russian economy
under “baseline,” “accelerated adaptation,” and “global crisis” scenarios. It also
reiterates its main goal of achieving price stability with a flexible inflation
targeting strategy, ultimately keeping inflation close to 4% permanently.

The “baseline scenario” assumes that persistently high inflation will lead to
tightened monetary policy worldwide. It also takes into account the impact of
current sanctions on the Russian economy. Under these conditions, the CBR
expects to maintain a key rate of 6.5-8.5% during 2023 in order to reach the

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