Russia seems to be on the way to a much smaller recession than initially expected this year, Bloomberg reported on Wednesday, July 6, citing experts. According to them, the growing oil supplies have weakened the impact of US and EU sanctions.
According to the publication, economists from JPMorgan Chase, Citigroup and other major banks are lowering their forecasts for a drop in production this year to just 3.5 per cent. Russian officials, some of whom predicted a reduction of as much as 12 per cent, are now preparing to update their forecasts to less than half of this figure.
”The boxer is now moving again after being knocked down,” Anton Tabakh, chief economist of the Moscow credit organization Expert RA, said. “There was a knockdown, but it was largely offset by comfortable export prices, even taking into account discounts, and the ability of the budget to allocate money to solve the problem.”
The economy is still “facing the sharpest contraction since at least 2009,” Bloomberg said, adding that “the government’s rapid steps to stabilize the currency in the first weeks after the war prevented a financial crisis, followed by a flood of export earnings.”
Seasonally adjusted data from the Development Center of the Moscow Higher School of Economics (HSE) showed that industrial production in Russia in May increased by 1.7 per cent compared to the previous month.
“The break in the reduction in May may be a sign that manufacturers initially adapted to the shock of anti-Russian sanctions,” it is said in a statement.
Economists noted that the recovery of oil production as a result of growing domestic demand and the transition to export buyers in Asia has become an important factor for the Russian economy. Gas production has been another key economic engine fueling revenue growth amid soaring prices.
“We are not at the level of stress that we expected for 2022,” Rosbank economist, Evgeny Koshelev, told Bloomberg. “We should expect trends to improve, as both budget and monetary policies are generally stimulative.”
Ru-Main, 07.07.2022
Source: RT
