Russia's economy has been a subject of debate among the world's top forecasters as they struggle to reach a consensus on whether it is expanding or contracting. The uncertainty of war and ambiguity of official data have made forecasting a complicated task, especially since Moscow stopped sharing some economic figures shortly after invading Ukraine in 2022. Some banks and international organizations expect Russia to see an economic expansion this year, while others anticipate further deterioration before a rebound.
Mixed Forecasts for Russia's Real GDP in 2023
According to data compiled by the Wall Street Journal, here are seven forecasts for Russia's real GDP in 2023 from some of the world's top forecasters: JPMorgan predicts 1.0%, the International Monetary Fund 0.7%, the World Bank -0.2%, Morgan Stanley -0.6%, the Bank of Russia -1.1%, Goldman Sachs -1.3%, and the Organisation for Economic Co-operation and Development -2.5%.
The Surprising GDP Drop and Warnings Against Using It as a Gauge
The mixed forecasts for 2023 come after Russia surprised analysts last year. Shortly after Russia invaded Ukraine, some commentators said the country faced a contraction of up to 15%. But the IMF estimates GDP dropped just 2% last year. However, economist Mikhhail Mamonov has warned against using GDP as a gauge for a nation at war, especially for a nation like Russia where official data may be altered. He pointed to a steep drop in retail spending as reason to believe the economy suffered a dramatic contraction.
Independent economist Alexei Bayer shares this sentiment, cautioning observers not to place too much faith in numbers that incorporate Moscow's official data. In a recent Jerusalem Post article, Bayer went as far as to say that "Russian economic statistics are a collection of lies and distortions."
Long-Term Headwinds Amid War
Over the longer term, Russia is likely to face growing headwinds as war drags on in Ukraine. Economist Konstantin Sonin has warned that the current regime could follow the path of the Soviet Union and barrel toward "complete economic implosion." Finland's central bank has also weighed in, saying that Russia is undergoing "reverse industrialization" as war costs force it to pull back investments in technology. Laura Solanko, a senior advisor for the Bank of Finland, recently wrote in a blog post that "Russia is stuck ineluctably on a path to lower potential growth and a bleak economic future."
Conclusion
The uncertainty surrounding Russia's economy amid war and a lack of transparency in official data makes forecasting a challenging task. While some forecasters predict an economic expansion in 2023, others anticipate further deterioration before a rebound. In the long term, the war in Ukraine is likely to pose growing headwinds for Russia's economy, leading some economists to warn of potential economic implosion and a bleak future.
