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The Russian government raised its domestic economic growth forecast for this year to 3.9% from a previous forecast of 2.8%. Finance Minister Anton Siluanov told Russian state television. Reuters wrote that economic growth should accelerate from last year’s 3.6% due to increased state spending.
The new estimate for growth this year is part of an updated economic outlook for the year, which the Russian government should release soon. “We are seeing the economy grow faster than experts expected,” Siluanov said. “This suggests that the economic growth is partly due to fiscal stimulus,” he added.
Preliminary data this week showed that Russia’s gross domestic product (GDP) grew 4.6% in the first half of the year, compared with just 1.8% in the first half of last year.
Growth despite sanctions
Russia’s economy, currently driven by military production, has continued to grow despite Western sanctions over its invasion of Ukraine. However, first-half data showed the economy was overheating, the central bank said, citing persistent labor shortages, sharp wage increases and high inflation.
As a result, the central bank raised its key interest rate by two percentage points to 18% last month, the highest level in more than two years. It pledged to maintain tight monetary policy until inflation is under control.
Growth will slow down in the second half of the year
New estimates for Russia’s economic growth this year suggest that growth will slow in the second half of the year compared with the first half. This could make it easier for the central bank to combat high inflation, Reuters writes.
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