As Russian officials minimize the economic implications of President Vladimir Poutine’s decision to attack Ukraine The emergence of the data for 2022’s year-end in the last few weeks has provided an unsatisfying picture of the economic performance.
There were positive indicators that inflation slowed down after reaching the highest level in April as revenues from gas and oil increased to record levels.
The IMF last week even revised up the prediction regarding Russian Economy. Russian economy, anticipating 0.3 percent growth for 2023.
But, at the same time, the remittances soared in the last year, as the population flooded out of the country. Banking profits fell , and the budget deficit hit record highs.
“The main takeaway of the year: having somehow coped with the first blow, the Russian economy looked around and realized there are no good prospects,” Vladimir Milov an ex-deputy energy minister and a ally of the jailed opposition figure Alexei Navalny, wrote in an earlier piece.
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Budget Deficit and Surplus
Russia had a deficit in its budget that was 3.3 trillion rubles ($47 billion) in 2013, the second-highest in the nation’s history.
The 2.3 budget gap not surpassed until 2020, when it reached 4.1 trillion rubles ($58 billion) equivalent to 3.8 percent of GDP in the course of coronavirus’s pandemic.
Russia estimates that its deficit in the budget could rise to 3.0 trillion rubles ($43 billion) in the coming year, and experts suggest that it could reach up to 4.5 trillion rubles ($64 billion). As part of the Ukraine conflict, at most one-third of Russia’s spending is likely to be devoted to security and defense.
Oil and Gas Revenues
Revenues from the sale gas and oil increased by 28% last year , to be at 2.5 trillion rubles ($36.5 billion).
However, as the cost for Russian oil is expected to drop in the wake of the Western price limit for Russian crude, profits are expected to decrease. Analysts are also warning that a stronger ruble could reduce the revenues from gas and oil.
Inflation and Interest Rates
The war has helped raise prices for consumers especially after the initial round of Western sanctions at the beginning of 2022.
However, inflation decreased over the next few months, with the year’s end total at 11.9 percent. Economists such as Milov have observed an increase in the cost of certain products for consumers in recent times.
The Central Bank hiked the rates in the early days of the war. However, they have been slowly decreased and ended the year with 7.5 percent.
The use of the windfall oil money from Russia as well as Russia’s “partial” mobilization weakening consumer demand, and a change in the direction of supply chains towards Asia are all contributing to prices to rise, Central Bank’s head Elvira Nabiullina stated during December.
The Central Bank predicts consumer prices will rise by 7% by 2023.
Remittances to Post-Soviet Countries
Transfers of money from Russia have risen dramatically due to hundreds of thousands Russians quitting the country in protest at the war and trying to stay out of the requirement to be drafted.
The former Soviet republics which were some of the most sought-after destinations for those wishing to emigrate Russians -experienced a rise in remittances of up to 600% by 2022.
Banking Sector Profits
After earning records-setting profits in the amount that topped 2.4 trillion rubles ($34 billion) in 2021, Russian banks saw the opposite of a profitable the year 2022.
The company ended their year with profits of $2.3 billion. ($2.9 billion) in the face of a massive withdrawal of deposits and Western sanctions that have hit bottom line.
The Central Bank said earlier this month that the profits from the banking sector could be greater than 1 trillion rubles by 2023.