The Central Bank of Russia (BCR) has forecast a less pronounced recession in 2022 than expected in April, predicting that the Russian economy will fall by 8% to 10% due to the impact of Western sanctions. A sharp decline in gross domestic product (GDP) in the second quarter.
After a formal meeting, the board of directors decided to reduce the interest rate by 150 basis points to 9.5%, the Russian monetary institution “The external environment of the Russian economy is challenging and significantly restricts economic activity“From the country.
“Overall, the real decline in economic activity in the second quarter was less pronounced than the Bank of Russia expected in its April core situation.He pointed out in a statement.
“As noted above, the Bank of Russia estimates that the fall in GDP in 2022 will be less than expected in April.”, He said without making firm predictions.
On April 29, the PCR predicted that the Russian economy would fall by 8% to 10% this year due to the impact of Western sanctions on Russia for its military campaign in Ukraine, marking the worst recession since 1994. And the worst record since the rule of President Vladimir Putin.
The Russian government predicts a 7.8% contraction this year.
Russia’s GDP shrank by 3% year-on-year in April, after rising 1.3% in March, according to data released by the Ministry of Economic Development yesterday.
The company, directed by Elvira Nabiúlina, explains that high-frequency indicators indicate a decline in business activity in May, following a sharp decline in April.
However, trends in different sectors are mixed and the decline in economic activity is due to both demand and supply factors.
“Despite initial diversification of suppliers in the finished goods, raw materials and components and sales markets, BCR says Russian companies still have difficulties adjusting production and logistics due to sanctions.
According to Alexei Goodrin, chairman of the Court of Auditors and former finance minister, the restructuring of the Russian economy under sanctions will take 1.5 to two years.
At the same time, consumer activity is shrinking. “Families are more inclined to save and real incomes are declining”, Refers to the Russian regulatory body.
For its part, the contraction of imports due to trade and financial sanctions “Significantly exceeds the fall in exports”, BCR explains.
As for inflation, from the growth rates of prices in May and early June, it has been declining rapidly, the PCR said today.Have been less”.
At the beginning of the month, annual inflation fell to 17% from 17.8% in April. According to the Bank of Russia, annual inflation will be between 14% and 17% in 2022.
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