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6 Jan, 2024 14:59

Russian officials reveal 2024 economic growth forecast – RIA

Analysts polled by the news agency expect GDP to turn sluggish due to high interest rates
Russian officials reveal 2024 economic growth forecast – RIA

The Russian economy will inevitably slow down in 2024 due to tight monetary policies pursued by the central bank, RIA Novosti reported on Saturday, citing a consensus outlook for the Russia's GDP growth.

Gross domestic product is expected to see a moderate increase of 1.6% compared to the previous projection of 3.5%.

The slowdown will occur due to a reduction in state investment and subsidies of the construction sector, as private investment will not have a chance to turn into a full-fledged driver of the economy, according to Aleksander Abramov, head of the Laboratory for Analysis of Institutions and Financial Markets at RANEPA, as cited by the news agency.

“In 2024, we expect GDP growth at 1.5-2% with the main driver most likely to be demand from the population,” Abramov said.

According to Oleg Abelev, head of research at Ricom-Trust Investment Company, growth will also be dragged down by the weakening ruble.

Promsvyazbank analyst Denis Popov told the news agency that GDP would increase by a mere 1.2%, as factors driving a growth recovery are exhausted.

“Further economic growth will be facilitated by maintaining a stimulating fiscal policy, structurally high demand for investment in core assets, further growth of incomes amid a labor shortage, and policies supporting a faster increase in the minimum living wage,” Popov said.

Analysts polled by the news agency share the view that the Bank of Russia will not rush to soften its monetary policy, although the regulator has already completed its hawkish cycle.

On December 15, the central bank raised the interest rate by 100 basis points to 16%, explaining that inflationary pressures remained high. That marked the fifth hike since summer, when the base rate was 7.5%.

For more stories on economy & finance visit RT's business section

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