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13 Feb, 2024 10:47

IMF admits surprise at Russian economic strength

The Washington-based fund had previously been criticized for its optimistic assessment of Russia’s economy
IMF admits surprise at Russian economic strength

The Russian economy has been growing faster than many economists projected, IMF First Deputy Managing Director Gita Gopinath admitted on Monday in an interview with Foreign Policy magazine.

Russian GDP climbed by 3.6% in 2023 and the country’s authorities expect growth of at least 2.3% this year.

The IMF significantly raised its growth forecast for the Russian economy earlier this year, projecting 2.6% growth in 2024. The estimate is a sharp increase from its October forecast of a 1.1% gain. The forecast for 2025 was also increased by 0.1 percentage point from the October estimate, to 1.1%.

The Washington-based financial institution has been repeatedly criticized for what has been seen as a very optimistic assessment of Russia’s economy despite the intense pressure the West is placing on the country over the Ukraine military operation.

“Russia’s growth has come in stronger than we expected, we revised it up by a percentage, and a percentage and a half this year,” Gopinath said. “So, we are squarely positive growth territory, it has done better than we expected.”

She noted, however that the economy is showing signs of overheating due to the large amounts of fiscal spending, extremely high military expenditures and increased social payments, which are causing growing deficits and putting upward pressure on inflation.

Russia has turned into “a wartime economy,” according to Gopinath, who believes there is “considerable uncertainty” about the medium-term prospects.

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