The economy of the world’s top energy exporter grew the most in more than a decade in 2021, rebounding from a pandemic-linked recession the year before as oil prices jumped and consumer spending grew.
Russian gross domestic product rose 4.7% last year, the fastest since 2008, according to the Federal Statistics Service. That was above the 4.5% forecast in a Bloomberg survey. Government stimulus as well as the global economic recovery and rising oil prices last year lifted growth. In 2020, the economy had contracted 2.7% amid Covid-19 restrictions.
Last week, Bank of Russia Governor Elvira Nabiullina warned that the period of post-pandemic recovery was over and the economy now is overheating. Inflation is running more than double the central bank’s target, despite 525 basis points in interest-rate hikes over the last year. Nabiullina said growth this year is likely to slow to 2%-3% and decelerate further in 2023. The risk of potential new western sanctions amid the tensions over Ukraine further clouds the outlook.
What Bloomberg Economics says…
“Annual figures should imply a surge in growth into year-end, through the deadliest phase of the pandemic. It can only slow from here, as aggressive monetary tightening and geopolitical uncertainty take their toll.”
–Scott Johnson, Russia economist. Latest report
“Economic growth will clearly slow down,” said Natalia Lavrova, chief economist at BCS Financial Group in Moscow. “The economy will be overheating, but return to the neutral rate in 2023.
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