ALEXEY VEDEV PRESENTS ECONOMIC FORECAST FOR 2024

“The economy will grow in the range of 1-1.3%, as the recovery cycle from the 2022 recession has been already completed. Besides, its potential is undermined by high government spending on unproductive items of expenditure, while business is limited in its development by sanctions pressure and high banking interest rates. Negative dynamics of oil prices is considered as a serious risk: this factor may negatively affect financial stability. The federal budget and the military-industrial complex will be key drivers. The ruble exchange rate will be in the range of Rb93-95 per dollar showing less volatility than in 2023. The Bank of Russia fails to target inflation to 4%, which will amount to 5-5.5% by the end of the year. As for the average price of Russian oil, which recently dropped below $60 per barrel, next year it will hardly exceed this mark. The discount may vary in the range of 15-20% depending on external conditions.

As the budget now looks optimistic, it may be necessary to cut spending during the year. The deficit will not exceed 1% of GDP. It is likely that tax burden on households and business will be tightened, various excises and duties will grow, and preferential treatment will be on the contrary abolished. Real disposable incomes of Russians will grow by no more than 1-2%. There are several reasons for this: weak indexation of pensions and wages, high inflation and interest on loans, as well as tax increase.”