World Bank increases estimate for Russian economic development
Date
6/12/2024 8:39:35 AM
(MENAFN) The World bank has revised its growth forecast for the Russian economy, citing stronger-than-expected performance driven by robust private demand and burgeoning trade ties with China, according to the latest edition of its Global Economic Prospects report for 2024. The revised projections indicate that Russia's GDP is expected to grow by 2.9 percent in 2024 and by 1.4 percent in 2025, representing an upward revision from the previous forecast of 2.2 percent and 1.1 percent growth, respectively.
The report highlights Russia's outperformance in 2023, with economic growth reaching 3.6 percent, significantly surpassing earlier projections. Factors contributing to this growth surge include increased private demand buoyed by subsidized mortgages, fiscal stimulus measures, and a tight labor market. Additionally, heightened military expenditures have also contributed to economic activity.
However, the World Bank cautions that the anticipated tightening of macroprudential measures and the scaling back of subsidized mortgage provision are expected to temper private demand moving forward. Nonetheless, the report underscores that the carry-over effect from robust growth in late 2023 and early 2024 is expected to sustain activity throughout the current year.
Moreover, the report highlights the deepening trade ties between Russia and China, with a growing number of transactions being conducted in Chinese yuan as part of Moscow's strategic 'pivot' to the East. This shift reflects Russia's efforts to diversify its trade partners and reduce reliance on Western markets.
Russian President Vladimir Putin has echoed the positive economic outlook, noting that the country's GDP expanded by 3.6 percent in 2023, rebounding from a downturn in 2022 amid Ukraine-related sanctions. Putin emphasized that the growth has been primarily driven by non-resource sectors, indicating a broader-based economic recovery.
Overall, the revised growth forecast and expanding trade relations underscore Russia's resilience amidst geopolitical challenges and its strategic efforts to foster economic diversification and sustainable growth.
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