Due to ever-increasing sanctions, Russia is facing its deepest economic downturn in almost three decades.
This was reported by Bloomberg with reference to people who are familiar with the internal forecast of the Ministry of Finance. This document is not yet publicly available.
Russiaʼs gross domestic product is likely to shrink by 12% this year, more than the expected 8% decline. If the forecast of the Ministry of Finance turns out to be accurate, it will nullify about a decade of economic growth, and such a collapse can be compared with the collapse of the economy of the former Soviet Union in the 1990s.
According to the interlocutors, uncertainty about the prospects remains very high as the war continues and the United States and its allies are discussing further sanctions, including on key export goods such as oil.
"The main negatives are the oil embargo, the EU giving up Russian gas, along with more departures among foreign companies," said Natalia Lavrova, chief economist at BCS Financial Group in Moscow. "All that will probably expand gradually, with a lot of negative carrying over into 2023."
On April 29, the Bank of Russia announced that it expects GDP to decline by 8-10% this year. The International Monetary Fund forecasts a decline of 8.5%, while a survey of economists by Bloomberg showed an average decline of 10.3%.