The Ministry of Economy assessed the risks of economic decline in the face of tougher sanctions

In the negative scenario, the decline in the Russian economy this year will be 8.8%, according to the baseline scenario, it is expected at 7.8%. In a conservative assessment, the agency takes into account tougher sanctions

The Ministry of Economic Development has prepared a conservative version of the scenario parameters for 2023 and for the planning period of 2024 and 2025.

It differs from the baseline in that it takes into account a deeper decline in the Russian economy in 2022 - by 8.8% - in the face of tougher sanctions and a slower restructuring of production and logistics chains. In addition, it takes into account a more significant decrease in the EXPORT prices of Russian goods.

According to the conservative scenario, GDP in 2023 will fall by 2.9%, and by the end of 2025 the figure will be 7% lower than in 2021. “The main factor is a structural decline in income and consumer demand, as well as a deeper drop in exports and investment,” the ministry explained.

The Ministry of Economic Development included a two-year recession in the scenario Economics

The agency predicts that world prices for Urals oil will fall to $57 per barrel by 2025, and the ruble will weaken to 85.3 rubles by this time. per DOLLAR.

The Ministry of Economic Development expects that the depreciation and more serious interruptions in imports will lead to a deeper decline in consumer demand, which will affect lower inflation than in the base case: 16.5% in 2022, 5.4% in 2023 -m, 3.7% - in 2024.

Economists presented three scenarios for the impact of sanctions on Russia's GDP Economics

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On the eve of the Ministry of Economic Development published a basic version of the scenario conditions for 2023 and the planning period of 2024-2025. According to him, the fall in the economy in 2022 will be 7.8%, that is, by 1 p.p. less than in the conservative version, and in 2023 - 0.7%. In 2024 and 2025, the ministry expects GDP growth of 3.2 and 2.6%, respectively.

In the base case, by 2025, the average annual oil price is $61.2. Inflation is expected to reach 17.5% at the end of the year, in 2023 it will slow down to 6.1%, and then return to the target level of 4%.

The agency also predicted a decline in exports and imports of goods. Imports are expected to decline by 27% in 2022 compared to 2021 in physical terms due to logistics and shrinking domestic demand. In value terms, the reduction in imports will be 17% (from $304 billion to $251.9 billion), taking into account global inflation and an increase in transport and logistics margins.