The bank of Russia will release its new macroeconomic outlook today. Despite sanctions against Russia, its central bank indicates that
The bank of Russia will release its new macroeconomic outlook today.
Despite sanctions against Russia, its central bank indicates that high-interest rates of 20% combined with government fiscal stimulus will keep its economy steady. While the estimates from Russia’s central bank are likely to present the most optimistic forecast for Russia’s economy, key economic indicators have stabilized—the value of the Russian ruble has largely returned to pre-invasion levels. The Russian government also expects an additional $9.6 billion in revenue from energy exports in the month of April.
However, Russia’s economic dependence on energy and natural resource exports presents additional risks in the long term. The government of Germany, one of Russia’s largest export customers, recently indicated it could immediately stop the import of Russian oil and also plans to stop importing Russian gas by the middle of 2024. The likely future loss of export revenue from Germany and other European countries will put additional downward pressure on the Russian economy, dampening future growth prospects. While Russia has attempted to reorient its markets to China, this is unlikely to supplement lost revenue from Europe due to the absence of export infrastructure and Chinese plans to phase out fossil fuels.
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