Economy: Russia: Inflation expected to be over 20 percent this year

Russia: Over 20 percent inflation expected this year

Russian ruble banknotes: The European Union put severe sanctions against the Russian central bank into effect at the end of February. Photo: Sven Hoppe/dpa

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Western sanctions against Moscow have been in effect for several weeks. Banking experts from Russia are expecting inflation of 22 percent in the current year – things are no better when it comes to gross domestic product.

Russian banking experts expect inflation to reach 22 percent this year and gross domestic product (GDP) to fall by 9.2 percent. This is the result of a survey by the Russian central bank.

This means that expectations have deteriorated further compared to March. At the time, bankers had expected 20 percent inflation and an 8 percent drop in GDP in Russia in view of Western sanctions.

Two months after the start of the war against Ukraine ordered by the Kremlin, the prospects for 2023 have continued to deteriorate: the experts now expect no growth at all instead of one percent for next year.

Russia’s President Vladimir Putin, on the other hand, stressed again on Wednesday that the West’s “lightning war” against the Russian economy had failed. Inflation, while rising to a high of 17.5 percent year-on-year, is now stabilizing, he claimed. He also described the withdrawal of Western companies from Russia as an “opportunity” to free themselves from their dependency on the West and set up their own production facilities.

Kremlin spokesman Dmitry Peskov said that there could be no general approach to the question of the nationalization of abandoned companies being discussed in Russia. Every company behaves differently, so each case must be considered individually. There are companies that do not fulfill their obligations towards their employees. “You need special attention.”

The head of Russia’s central bank, Elvira Nabiullina, admitted problems caused by the western sanctions before the Russian parliament, the State Duma. The punitive measures would not only affect areas that import a lot, but also those production that are already highly localized but depend on individual parts from abroad. Nabiullina was confirmed in office by MPs on Thursday for another five years.


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