Economists have estimated the loss of Russian GDP under different scenarios of sanctions Sanctions

can cost the Russian economy from 6.4 to 11.5% of the decline in 2022, depending on different scenarios for the development of the crisis. Under certain parameters, in 2023 the losses of the economy may be greater,

The Institute for Applied Economic Research (IPEI) of the RANEPA has developed a model for predicting the decline in the Russian economy due to external economic shocks. The results obtained were presented by Andrey Zubarev, senior researcher at the Laboratory for Mathematical Modeling of Economic Processes at the Institute of Economics and Economics, RANEPA, at the second seminar in a series of meetings at the Higher School of Economics dedicated to long-term socio-economic development in conditions of isolation and sanctions. RBC followed the scientific discussion.

The model showed that the depth of the economic downturn due to the effects of sanctions (ceteris paribus) will be 6.4–11.5% of GDP in 2022, depending on the level of oil price discount , the depreciation of the ruble, and trade turnover. The figures obtained are not a forecast of the annual dynamics of GDP, but reflect only the effect of external economic shocks on the Russian economy (i.e., for example, budgetary or monetary policy can offset part of the sanctions downturn). In a number of scenarios, the economy is expected to suffer the same or even more from the restrictions imposed next year.

IPEI RANEPA experts have built a global vector autoregression model (GVAR-model), the peculiarity of which is that it combines the global and Russian econometric models. It assesses the impact of external economic shocks on the 41 largest economies, including RUSSIA, and separately on the oil market. They are combined into a single system and evaluated quarterly data since 1999 for Russia and since 1979 for other countries. Several channels of transmission of economic shocks are taken into account: trade with individual regions, changes in energy prices, and the exchange rate channel. The application of the predictive model retrospectively to the data of 2021 as an experiment showed a result, according to the authors of the model, close to the official actual data. The simulated value showed GDP growth of 5.1%, and according to Rosstat,

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Six scenarios for falling GDP

The authors of the study modeled six predictive estimates of Russia's GDP losses in the first and second years of the sanctions, depending on a different combination of variables - imports and exports, oil prices, the ruble exchange rate. They take into account the sanctions imposed against Russia by the European Union, the United States , Great Britain, Japan, SOUTH KOREA, CANADA and Australia and their consequences for trade turnover, reflected in the available data of national statistical services.

Thus, the scenarios assume a weakening of the average annual exchange rate of the ruble by 20% from the pre-sanctions level or the stability of its dynamics, a drop in trade with unfriendly countries by 50 or 75%, a drop in oil prices for Russia (due to discounts on Urals), a partial reorientation of Russian foreign trade towards Asia, etc. For example, Scenario No. 4 was formed taking into account incoming trade statistics and an amendment to the fact that some European countries are now actively purchasing Russian energy resources. Among them is Italy, which in April increased imports from Russia by 40% due to purchases of gas for future use. In this scenario, the trade turnover with Europe will fall by 30%, and the ruble will also weaken. The fall in GDP specifically due to sanctions is projected at 7.2 and 7,

Commenting on the results of the forecast, Zubarev suggested that the discount in the price of Russian oil would have a more significant effect on economic growth in Russia than the exchange rate, which is currently not fully determined by market mechanisms (the growth of the trade surplus is due to external restrictions). At the same time, in theory, an increase in trade with CHINA could significantly mitigate the fall in GDP, but in practice, one should not expect an immediate strong increase in turnover with China, he believes. On the other hand, some partners, such as India, may demand the sale of oil to them at an even greater discount, which is likely to negate the GDP gain from increased trade with this country.

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Inertial model

According to the discussion of the scientific seminar, the HEAD of the Economic Expert Group Yevsey Gurvich, the results of the predictive model of RANEPA experts generally look plausible, but he pointed out the difficulty of macroeconomic forecasting in the realities of unprecedented sanctions with their “non-market” nature.

The construction of GVAR models makes it possible to well identify joint trajectories of various indicators (in this case, GDP, oil prices, the ruble exchange rate, trade turnover, and a number of others) and the interdependence between them based on quarterly data for decades, but they are effective if fundamental economic ties have not changed over this period, notes another participant of the seminar, head of the real sector of the Center for Macroeconomic Analysis and Forecasting (CMASF) Vladimir Salnikov. “Obviously the world has changed. Relationships in the economy were disrupted. For example, we have never seen before that with a decline in GDP, a strong strengthening of the ruble began - it was always the other way around, ”the expert is skeptical.

In addition, the RANEPA model, which provides for almost the same drop in GDP due to sanctions in 2023 as in 2022, is very inertial, says Salnikov. And forecasts of annual GDP dynamics made by the Ministry of Economic Development, the Central Bank, and independent institutions show that in 2023 the negative effect of sanctions will be offset by positive factors, which will affect economic growth. “The currently available macroeconomic forecasts for annual GDP dynamics take into account the fact that the Russian economy is quickly adapting and the escalation of sanctions is close to the finish line, as the sanctioning countries bear the costs,” he told RBC.

At the end of 2022, the Ministry of Economic Development expects a fall in GDP by 7.8%, the Central Bank indicates an interval of 8-10%. In 2023, according to the expectations of the departments, the Russian economy will no longer experience such a deep recession. The Ministry of Economy expects zero growth rates, and the Central Bank - a range from zero to minus 3%. The CMASF expects a decline in GDP this year by 7-7.2%, next year - by 1.2-1.5%. The World Bank expects the Russian economy to contract by 8.9% this year and 2% in 2023.

Earlier, the long-term effect of sanctions on Russian GDP until 2030 was estimated in a consensus forecast prepared by the Institute for Development at the Higher School of Economics, RBC wrote. According to a survey of 17 macroeconomists from public and private organizations, the consequences of sanctions will slow down the growth rate of Russian GDP by 1-1.5% per year.