ALEXEY VEDEV ASSESSED ECONOMIC FORECAST BY THE WORLD BANK
Alexey Vedev, Head of the Financial Studies Department at the Gaidar Institute, assessed the economic forecast by the World Bank, which has reviewed results at 2023 yearend submitted earlier. Izvestia published the economist’s opinion.
According to a new World Bank report, the GDP will fall by 0.2%. The previous forecast assumed that the indicator would evidence 3.3%. The World Bank experts believe that negative impacts for the Russian economy will happen in the medium term. The improvement of the forecast is partly due to the low level of public debt in Russia and partly due to the reserves, according to the World Bank experts. However, they believe that private investment will fall, probably because of the brain drain. The World Bank presented a forecast for the coming years: in 2024, the GDP decline will be 1.2% (previously - 1.6%), in 2025 it is expected to grow by 0.8%.
Previously, the IMF predicted that the Russian economy will grow by 0.3% in 2023 and by 2.1% in 2024. The forecast of the Central Bank of the Russian Federation for GDP in 2023 is from -1% to +1%. Alexey Vedev expressed his opinion that the current forecasts for the development of the Russian economy fall into three groups.
“The first group includes pessimists who estimate the GDP fall at 3-5%. The second group consists of moderate realists who assume a small minus fall and the third one represents optimists who forecast the GDP growth as a small gain. In particular, a month ago, my department prepared a forecast for the development of Russian economy. According to our estimates, the fall will be at 1%. The World Bank assume -0.2%. However, I think, this is one group of forecasts and they differ by statistical tolerance”, he explained.
According to Alexey Vedev, the main deterrent factors include the oil prices that were higher than expected.
He continued: “Moreover, a stimulating government policy is applied. There is also an active interaction with business, i.e. the replacement of foreign networks by Russian ones, which supports both the supply of goods and services and the demand. These are the three main factors that will determine the performance of our economy this year.”
According to Alexey Vedev, moderate growth is forecasted in 2024:
“However, the uncertainty is so high that any forecast will not be very accurate, because a large number of options and conditions have an impact on GDP growth. And, accordingly, there are many scenarios,” he concluded.