Page 54 - RusRPTSept22

federal government official familiar with the macroeconomic forecast discussions told reporters.
The Ministry of Economic Development expects Russia’s retail trade turnover to decline by 6.6% as of the end of 2022. The ministry expects the retail trade turnover to gain 2% in 2023, 5.6% in 2024, and 2.4% in 2025.
The draft paper also anticipates that paid services to the population will tumble 1.5% as of the end of this year but will rise by 1.3-2.8% in 2023-2025.
The ministry revised its forecast for the country’s unemployment rate from 6.7% in the May outlook to 4.8% as of the end of 2022. The average annual unemployment rate is expected to be 5.2% in 2023 and 4.6% in 2024, while the forecast for 2025 provides for 4.5%. The unemployment rate is expected to be the highest in late 2022 - early 2023, the government official noted.
High energy prices and slowing trade threaten to push Europe into recession, says IIF. The explosive rise in gas and electricity prices is dictating the eurozone economic outlook. Gas futures have risen more than 50% over the past month as fears about Russian supply, combined with adverse weather factors, dominate the market. This will prompt an upward revision to our gas price forecast, with implications for growth and inflation in Europe over the winter and 2023.
The voluntary reduction in energy consumption, coupled with the demand destruction prompted by the huge rise in prices, is likely to lead to the eurozone falling into recession over the coming quarters. That said, Oxford Analytics is more optimistic than a few weeks ago about the need for hard energy rationing over the winter, given the progress seen in European gas storage levels. The magnitude of the price rises means that further intervention by governments is almost certain, which should help offset some of the impact on economic activity.
Data released this week offer little reprieve, with PMIs suggesting the euro area economy could be already in contraction, while the German ifo index showed business sentiment sinking to levels last seen during the pandemic in 2020.
With gas futures much higher than the current baseline forecast and no realistic end in sight, this will prompt a major upward revision to gas price projections in the next forecast revision. That will have important implications for inflation, which will stay higher for longer, and also for growth expectations for Europe, not only during the winter but also extending into 2023 as well.
But the magnitude of the economic impact will depend on several, often conflicting factors. The volatility in energy markets means that prices could see sudden steep falls as well as rises, depending on the news: for instance, if some sort of backroom deal with Russia is made that solves the alleged "technical issues" affecting deliveries and prompts a rise in gas supply.
Most European countries continue to raise their storage levels quicker than planned, which means that the EU target of 80% storage levels by 1 November looks likely to be exceeded. It now looks like Europe could survive
54 RUSSIA Country Report September 2022 www.intellinews.com