Page 13 - RusRPTMar23

CBR governor Elvia Nabiullina can be given a lot of credit for her astute management of the macro-crisis caused by Russian President Vladimir Putin’s decision to invade Ukraine and the subsequent avalanche of sanctions.
Russia's economy has adapted faster than expected to the shocks of 2022. Central Bank analysts credit this to the stability of the banking system, rising prices for falling export volumes, redirection of exports towards Asia, an effective reshaping of logistics chains, and government support. Business activity in Russia has been recovering and demand has been supported by government spending.
However, the economic recovery in Russia is uneven and faces challenges such as a preference for saving, difficulties in maintaining imported equipment, and staff shortages. A large percentage of Russian businesses have reported staffing problems, despite all-time low unemployment at around 3.8%, which could result in fierce competition for talent and inflationary risks.
The IMF forecasts contrasts dramatically with the latest CBR macroeconomic survey in February where the polled professional economists forecast a collective 2.9% decline for this year.
The main findings from the CBR survey include:
Inflation: In the February survey, the median forecast of the inflation for 2023 rose by 0.2 p.p. to 6.0%. Analysts still expect inflation to return to near 4% in 2024 and remain on the target of the Bank of Russia thereafter. (chart)
Key rate: Analysts expect a higher key rate path in 2023-2024 compared to the December survey. Forecasts increased by 0.2 p.p. to 7.5% per annum and 6.8% per annum respectively. For 2025, the consensus forecast for the average key rate is 6.0% per annum. At the same time, the median estimate of the neutral key rate changed by 0.5 p.p. to 6.0% per annum. (chart)
13 RUSSIA Country Report March 2023 www.intellinews.com