Russian economy ministry improves 2023 GDP growth forecast

MOSCOW (Reuters) – Russias economy ministry revised higher its 2023 gross domestic product (GDP) forecast on Friday to growth of 1.2% from a contraction of 0.8%, news agencies reported.

The International Monetary Fund this week also raised its forecast for Russia‘s 2023 economic growth, but said the country may see a sharply wider budget deficit and a smaller current account surplus this year. It said Russia’s global isolation and lower energy revenues could dampen its economic growth potential for years.

The economy ministry lowered its rouble rate forecast to 76.5 to the dollar in 2023, from 68.3 in the previous forecast made last autumn.

The rouble is down around 10% year-to-date, making it the third-worst performer among global currencies so far this year as it struggles under the weight of a Western oil price cap and shrinking export revenues.

Russias economy defied early expectations for a double-digit economic contraction in 2022, in forecasts made soon after Moscow sent troops into Ukraine last February, but a return to prosperity remains far off as the government directs more spending towards the military.

The economy shrank 2.1% in 2022. Before Russia began what it calls a “special military operation” in Ukraine, the government had expected 3% growth.

(Reporting by Reuters, Darya Korsunskaya and Alexander Marrow; Editing by Gareth Jones and Barbara Lewis)