Page 41 - RusRPTFeb23

Only China resisted this trend with an increase of 1% to 65%, despite the economic downturn triggered by his now-softened zero COVID policy. The sentiment reflects deep uncertainty about the state of the global economy as Russia's war against Ukraine continues, and central banks raise interest rates to combat inflation.
The world’s labour market will collapse due to the war in Ukraine. Global employment growth will slow sharply to 1% this year, compared to 2% in 2022, due to the economic consequences of Russia's war against Ukraine, leading to high inflation and tightening monetary policy, according to the International Labor organisation. In addition, the number of unemployed workers worldwide will increase by 3mn to 208mn in 2023, and the growth of real wages will be absorbed by inflation. All this means that the labour market’s losses suffered during the COVID-19 crisis will not be recouped until 2025, says Richard Samans, director of the ILO's Research Department. It is also predicted that progress in reducing the number of unofficial jobs will reverse in the coming years. As prices rise faster than nominal labour incomes, the cost-of-living crisis risks pushing more people into poverty, the ILO study said.
Economist Oleg Itskhoki said that the Russian economy will shrink up to 5% in 2023, while others believe the contraction will be even bigger. Alfa Bank’s chief economist, Natalia Orlova, has said that it will contract 6.5% on the back of falling consumer demand, lower investment and loss of export potential. In comparison, Russian GDP contracted 7.8% during the 2009 global economic crisis.
Russia's GDP will continue to decline in 2023 and by the end of the year, the decline will reach 2.5-3%, according to Alina Rozentsvet, General Director of the National Rating Agency.
In an interview with Izvestia, Rozentsvet said "We anticipate that GDP will continue to fall in 2023. It will drop by 4-6% in the first half of the year. In our opinion, the end point of this decline will be reached by the middle of the year, after which the start of economic recovery is possible."
She emphasised that economic recovery is feasible under a variety of conditions, the most important of which is overcoming the shock associated with a likely decline in oil production. "By the end of 2023, we expect a decline in GDP at the level of 2.5-3%" Rozentsvet added. She also noted that after accounting for inflation, the GDP indicator will not be able to return to its 2021 level before 2025.
Rozentsvet highlighted that the primary issue for the economy now is "to ensure the economy's sustainable operation for the next 2-3 years and set a long-term, strategic vector for its development to overcome technological disparities and ensure sustainable development in the interests of future generations."
In terms of oil prices, Rozentsvet believes that the average price of Brent oil will be within $80-100 per barrel, and the discount for Russian Urals at the beginning of the year will be $20-30, resulting in an average price of $60-65 per barrel in the first half of the year. She predicts that by the end of the year, Russian oil will be traded at around $95-110 per barrel.
41 RUSSIA Country Report February 2023 www.intellinews.com