Page 67 - RusRPTDec22

deficit of 1.8% of gross domestic product for 2022 as a whole. The budget deficit is expected to grow to 2.5% of GDP next year and to 4% in 2024, according to the forecast. The Russian government itself expects to run a deficit at least until 2025.
GDP is expected to shrink between 3% and 3.5% this year, according to recent forecasts by the country’s central bank, a shallower decline compared with forecasts earlier in the year after sanctions dealt a body blow to the economy.
Quarterly data, however, depicts a worsening trend. While the economy contracted by around 4.1% and 4% in the second and third quarters respectively, it is expected to shrink by 7.1% in the fourth quarter, according to a report by the central bank published this week. For the year as a whole, Russia is expected to record the deepest recession for any large economy.
While softening energy prices are threatening revenues, expenditures have been growing rapidly. The Ministry of Finance hasn’t published a detailed breakdown of spending since February, but Olga Bychkova, an economist at Moody’s Analytics, estimated that expenses on national defence, social transfers to offset high inflation, and other steps supporting the economy make up the biggest share.
Economists at the Vienna Institute for International Economic Studies forecast that the mobilisation would deepen the recession in the fourth quarter and shave off 0.5 percentage points of GDP growth for the full year.
The real extent of the hole in Russia’s budget will become clear in December, analysts said. Russia’s expenditures at the end of the year are usually much higher than in earlier months, Mr. Kluge said.
“The outlook for next year is much worse because one-time effects of windfall revenues in the early months of the war will be exhausted,” Bychkova said.
67 RUSSIA Country Report December 2022 www.intellinews.com