Page 94 - RusRPTAug24

Analysts’ expectations on the average key rate have been upgraded over the whole horizon - to 16.8% per annum for 2024 (+0.9 p.p.), to 15% per annum for 2025 (+2.6 p.p.) and to 10.6% per annum for 2026 (+1.2 p.p.). The forecast for the end of horizon is 8% per annum. Median estimate of neutral key rate remained intact at 7.5% per annum.
GDP growth forecast for 2024 has been upgraded by 0.3 p.p. to 3.2%. Analysts expect GDP to grow by 1.7-1.8% in 2025-2027. Median estimate of long-term growth rates has slightly increased to 1.6% (+0.1 p.p.). According to analysts’ forecasts, GDP growth in 2027 compared to 2021 will total +11.1%.
Moreover, analysts expect unemployment to go down to 2.6% in 2024 (-0.2 p.p.), up to 2.8% in 2025 (-0.2 p.p.) and return to the level of 2023 of 3% further on.
The outlook on the dollar/ruble exchange rate is 90.1 rubles per dollar for 2024, 95 rubles per dollar for 2025, 97.2 rubles per dollar for 2026, 98.9 rubles per dollar for 2027 (stronger by 1.1-2.4% compared to May).
The price of Brent crude oil is expected at $84 per barrel on average in 2024. Further on the price will decline and equal $80 per barrel in 2025 and $75 per barrel in 2026-2027 (outlook unchanged).
The national GDP moved up by 4.5% year on year in May 2024, the Russian Ministry of Economic Development said in its review. "According to the estimate of the Russian Ministry of Economic Development, GDP in May 2024 was +4.5% above the last-year level in annual terms after +4.4% in April," the Ministry said. The national GDP surged by 5% in annual terms over January - May 2024.
Russia’s economy grew by 0.8% in the second quarter quarter-on-quarter, with overheating persisting so far, according to the Central Bank’s bulletin "What Trends Say".
"Due to active growth in May-June seasonally-adjusted GDP in the second quarter increased by 0.8% compared with the first quarter, according to our estimate. Such economic expansion coupled with an increase in price growth points at least to persisting economic overheating," the regulator’s analysts said.
They also noted that "the economy is preparing to adjust to the trajectory of balanced growth, though this will not have an immediate impact on the labor market." "This is why economic overheating will most likely subside gradually," analysts added.
Russia’s labor market intensifies proinflation risks, the Central Bank’s experts added. "Labor demand has reached its all-time high and continues growing
94 RUSSIA Country Report August 2024 www.intellinews.com