Russia’s central bank improves key economic forecasts

The Central Bank of Russia (BCR) has kept its key interest rate unchanged at 7.50%, while improving its GDP forecasts for this year.

It now predicts a recession where GDP will fall between 3.5% and 3%, a shallower decline than the range of 6% to 4% the bank forecast last July.

Russia's central bank also thinks that in 2023 Russia will remain in recession with a contraction of between 1 % and 4 % GDP, although it expects the economy to return to growth in the second half of next year.

GDP, or Gross Domestic Product, measures the value of goods and services produced within a country. It serves as a measure of the size and health of a country's economy.

The BCR claimed that a growing number of companies are adapting to external trade and financial restrictions put on Russia by the West over its military campaign in Ukraine.

They claim a gradual diversification of suppliers of finished products, raw materials and components has happened, while forays into new markets, including a refocus on domestic consumer goods, have also helped the situation.

Analysts in the West claim international sanctions have had a severe negative impact on Russia's economy.

Labour market problems are also growing in Russia, driven in part by the partial mobilisation decreed by Russian President Vladimir Putin.

Russia’s resilience can be partially explained by high energy prices, with gas and oil forming a majority of the country’s export revenues.

Experts predict energy prices may fall as the global economy slows down and brings energy prices with it.

The West is trying to find new alternatives for Russia's energy exports, which could mean that Moscow loses €1 trillion in hydrocarbon sales between now and 2030, according to the International Energy Agency's estimates.