The Central Bank of Russia (CBR) has improved its outlook for the Russian economy again in its latest June survey of professional economists’ predictions, which includes the central bank’s own forecasts.

Analysts significantly improved their forecast for growth this year to predicting 0.8%, up from an earlier prediction of -0.1% in April. In 2025 growth will be 1.6%, where it will remain in the long term, the CBR said. The central bank’s own forecast for growth is in the range of 1%-2% for this year.

The median forecast for inflation this year was lowered to 5.5%, down by 0.4 pp from the April survey, but still above the 4% target rate. And nominal wages will continue to grow in the extremely tight labour market, which also means, thanks to falling inflation, real wages will also rise, which will feed Russia’s growth.

Analysts expectations of this year’s budget deficit are for 2.7% of GDP, which is worse than the Ministry of Finance (MinFin) forecast that it will hit its 2% target, although Russian Finance Minister Anton Siluanov recently admitted that his target may be missed.

And trade continues to do well, with $500bn of exports of goods and services and $375bn of imports leaving a trade surplus of $125bn. That is less than the record $275bn in 2022, but at the same level of the previous record set in 2021 of $120bn.

Below are the detailed notes and charts from the CBR’s report.

The ranges of analysts’ forecasts for most indicators for the next three years has continued to narrow (see shaded areas in the charts). The ranges for nominal wages, exports, imports, and oil price are wide over the entire forecast horizon. The ranges for exchange rate, exports, imports, oil price widen by the end of the forecast period.

Inflation: The median inflation forecast for 2023 was lowered to 5.5% (-0.4 pp compared to the April survey) for the next years – remains unchanged. Analysts expect inflation to return to near 4% in 2024 and remain within the target of the Bank of Russia thereafter.

Key rate: Analysts have not changed their expectations for the key rate path over the entire forecast horizon (7.5% per annum, 7.0% per annum and 6.0% per annum on average in 2023-2025 respectively). The median estimate for a neutral key rate is unchanged at 6.0% per annum.

GDP: Analysts have significantly improved the GDP forecast for 2023: they expect an increase by 0.8% instead of a decline of 0.1%. The forecasts for 2024-2025 are in line with the April survey. According to analysts, GDP in 2024 will already be 0.1% higher than in 2021. The change in GDP in 2025 to 2021 will be +1.6% (+0.8% in the April survey). The estimate of the long-term GDP growth rate is unchanged at 1.5%.

Unemployment rate: Analysts slightly lowered the forecasts (-0.1 pp in 2023 and 2025) and expect the unemployment to remain near the 2022 level over the entire horizon (3.6-3.7%).

Nominal wages: The growth forecast for 2023 has increased again – by 0.8 pp compared to the April survey to 9.7%. Expectations for growth in 2024-2025 are almost unchanged. Calculations based on analysts’ forecasts of nominal wages and average CPI suggest that real wages will increase by 3.8% in 2023, by 2.2% in 2024 and by 1.9% in 2025. Accordingly, by the end of the forecast horizon, real wages will be by 8.8% higher than in 2021.

Consolidated budget balance: Expectations are almost unchanged compared to the April survey. Analysts’ forecasts of deficit for 2023-2025 are 2.7% of GDP, 1.7% of GDP and 1.0% of GDP respectively.

Exports of goods and services: Expectations are almost unchanged for 2023: $500bn (-5bn compared to the April survey); 2024: $514bn (-$2bn); 2025: $525bn). As a result, according to analysts, the value of exports in 2025 will be by 4.5% lower than in 2021 (as in the April survey).

Imports of goods and services: Import values are projected to be about the same as in April: $375bn in 2023 (+$5bn), $390bn in 2024, $400bn in 2025. Thus analysts predict that the value of imports in 2025 will be by 5.3% higher than in 2021 (as in the April survey).

USD/RUB exchange rate: Analysts still expect a slight weakening of the ruble. Analysts’ forecast for 2023 – RUB76.9 per dollar, for 2024 – RUB77.9 per dollar, for 2025 – RUB79.5 per dollar (revision by +0.6-1.2% compared to the April survey).

Urals oil price: The forecasts are slightly lowered throughout the forecast horizon. According to the analysts’ expectations, in 2023 Urals oil will cost around $56 per barrel on average (-$4 compared to the April survey), in 2024 the price will rise to $60 per barrel (-$4) and remain on this level in 2025 (-$2).