The main figures forecast for 2024 are as follows: the dollar was 93.8 rubles in December, inflation was 7.3%, unemployment was 2.6%, GDP growth was 3.9%, real wages were 9.2% and income was 7.1%. Analysts at the Ministry began to be more optimistic than in the spring on almost everything except the growth rate of consumer prices. At that time, the Ministry of Energy’s expectations for the ruble were weaker (94.7 rubles per dollar on average for the year) and economic growth was not as strong (2.8%).
“We estimate that the economic growth rate this year will be even more optimistic than in April. And then the estimate was quite high – 2.8%, and now it is 3.9%, that is, even higher than last year. In the coming years, we predict a slight decrease in real GDP growth rates, including because, one way or another, the tightening of monetary conditions by the Bank of Russia will work. But still, the rates will remain in the positive zone and will amount to a quite decent 2.5%,” a representative of the ministry told RG.
The country’s good GDP growth rates did not fall from the sky – Russians had to do everything possible to achieve this, says Sofya Donets, chief economist at T-Investments.
“At the beginning of the year, expectations were that 2024 in terms of GDP growth rates would be lower than 2023, but it turns out that many of the risks that were included in the gloomiest forecasts did not materialize. We are likely to expect good things rather than bad, and we as a country have jumped out of our seats in terms of output growth. We have given it our all and done more than we thought,” he said.
The 3.9% GDP growth forecast for 2024 appears consistent with actual data for the first three quarters, but the forecasts for 2025-2027 appear too optimistic, says Alexander Isakov, chief Russia economist at Bloomberg Economics.
“Moreover, they are not entirely consistent with the monetary policy cycle. The Central Bank’s GDP forecast for 2025 is lower – by 0.5-1.5%. The overheating of the economy in the third quarter of this year is estimated at 2-3% of the year. According to various approaches, this means that in order to stabilise inflation and return to a stable path, growth will have to slow down to below potential growth rates, which, according to optimistic estimates, are around 2.5%, and according to more moderate ones – around 1% per year,” the expert explained the expert’s point of view.
Oleg Kuzmin, chief economist at Renaissance Capital investment company, did not find the Ministry of Energy’s optimism sufficiently justified. “In our opinion, we should see a more pronounced cooling of economic growth in 2025 against the background of a tightening of the Central Bank’s monetary policy and the normalization of fiscal policy. According to our estimates, GDP growth will be about 1.5%,” he shared his opinion.
Labor productivity will increase by 3.3% by the end of 2024, and in the future the growth rate will not fall below 2.3% per year. “In 2027, according to our forecast, growth will be 2.8%. These are quite high rates, higher than historical data, they are realistic and that is exactly what is happening now,” the Ministry of Energy noted.
The government expects the unemployment rate to remain minimal: just 2.6% for the next few years. The consequence of high employment and economic growth will be a new rise in wages and incomes to record levels, in real terms, i.e. less inflation.
“We expect that this year the real wages of employees of organizations will grow by 9.2%, in 2025 by 7%, in 2026 by 5.7%, and in 2027 by 4.1%,” the ministry said. At the end of last year, Russians’ wages in real terms increased by 8.2%, and their average nominal amount reached 73.7 thousand rubles. In 2022, wages decreased by 1%.
According to the updated estimate of the Ministry of Energy, the real disposable income of the population will grow by 7.1% in 2024, another 6.1% in 2025, 4.6% in 2026 and 3.4% in 2027. All this will support consumer demand, which, given the more severe external restrictions, translates into an increase in prices.
Inflation at the end of 2024 will not be much lower than last year and will reach 7.3%. This is even higher than the Central Bank had forecast (6.5-7%). It is true that the additional forecasts of the Ministry and the Central Bank coincide: 4.5% in 2025 and 4% thereafter. “Inflation this year is higher than expected because we see faster growth rates in household income,” the ministry explained.
“The Energy Ministry’s forecast of 7.3% inflation looks more realistic than the Bank of Russia’s current forecast of 6.5-7%, taking into account published statistics for 7 months and current estimates for August. Our forecast for price growth is 7.5% for December. Most likely, in the October revision of the Central Bank’s forecasts, the estimates of the two departments will converge,” Alexander Isakov suggested.
The outlook for the currency is not the brightest, although it has improved significantly compared to the April version of the forecast: 91.2 versus 94.7 rubles per dollar on average in 2024. Since the ruble was generally stronger in the first eight months, in the remaining time it will be weaker and in December it will fall to 93.8 per dollar.
In 2025, the Ministry of Energy expects the dollar exchange rate to average 96.5 rubles, in 2026 – 100 rubles, and in 2027 – 103.2 rubles. The weakening of the national currency is in line with the downward dynamics of the trade balance: $132.8 billion in 2024, $123 billion in 2025, $112.7 billion in 2026, and $118.9 billion in 2027.
“The forecasts for exports and imports have been reduced almost symmetrically. For exports, this is probably due to lower volumes, and for imports, reflecting the current difficulties with calculations due to secondary sanctions. In terms of foreign trade, the growing discount for Russian oil also attracts attention over the entire forecast horizon due to sanctions restrictions,” comments Andrei Melashchenko, economist at Renaissance Capital.
The average annual export price of Russian oil in 2024 will be $70 per barrel, in 2025 – $69.7, in 2026 – $66, and in 2027 – $65.5. In the April forecast for 2024, oil prices were set at $65 per barrel. In the new year, the price is higher for both 2024 and 2025, and, along with this, trade and current account surpluses are larger. As a result, the ruble exchange rate is stronger than expected,” said Rodion Latipov, chief economist of VTB Group.
A significant revision of the parameters for 2024 should, in theory, have entailed major changes in the figures for 2025, but the Ministry of Energy approached this column of the table with notable caution, says Sofia Donets. “It is a kind of recognition that everything is still very uncertain with the forecasts for next year, we will first wait until spring and then we will see,” she concluded.
All figures are presented in the basic version of the forecast, which the Ministry of Finance relies on when preparing the budget for the next three-year period. The government is expected to submit to the State Duma within a month a draft law on the federal budget for 2025 and for the planning period of 2026 and 2027.
