Page 7 - RusRPTOct21

recession in 2020. Growth is expected to slow to just over 2.5% per year between 2022 and 2023, towards a long-term growth outlook, as there are no wider market reforms that could boost economic growth in the next few years, the bank of Finland Institute for Economies in Transition (BOFIT) said in its weekly report.
“Of course, there are other factors in the forecast period that will affect the growth rate of the economy. The ruble will limit growth until next year, and on the other hand, some factors supporting the economy have improved. The price of oil has risen and market expectations of its decline have eased to such an extent that the price will soon turn to a slight decline and fall to about $65 in 2023,”OFIT said.
Improving global economic forecasts will support Russian exports.
Production restrictions under the OPEC + oil agreement eased in the summer, so the outlook for Russian oil exports has improved, as has the outlook for gas exports,OFIT says. Russia's tourism revenues (more than 2% of total export revenues in 2019) are expected to recover towards the end of the forecast period.
With economic growth, household incomes will rise and employment will improve, strengthening private consumption, which is expected to slightly exceed the 2014 peak in 2023. The pension increase line for 2019–2024 will increase pensions a couple of percent faster than forecasted inflation.
In addition, especially for pensioners, the substantial lump sums paid during the Duma election will provide a temporary impetus to consumption. Aoost to consumption is also expected from the fact that households accumulated a excess amount of savings from 2020, which are still unspent. Russians' foreign tourism, which remained very low last year, is expected to recover at a good pace towards the end of the forecast period.
Investments will continue to recover and are expected to reach the level of 2012–2014 in 2023. Investment growth is not expected to be very rapid, e.g.because capacity utilization in industry is still very low. On the other hand, the state plans to provide loans from the National Welfare Fund for selected investment projects in the coming years. The aim is to involve companies, which can increase investment if other companies' investments are not marginalized at the same time.
Imports of Russian goods and imports of services other than Russian foreign tourism are expected to increase quite well as GDP grows. The growth of imports is limited by the real exchange rate of the ruble, which is expected to remain fairly unchanged, as inflation in Russia is likely to still slightly exceed the inflation rate in trading partners. The recovery in tourism spending will significantly increase imports, as spending was 10% of Russia’s total imports in 2019efore its collapse. The distance between total imports and
7 RUSSIA Country Report October 2021 www.intellinews.com