Russia’s economy can shrink by as much has 8-12% this year (according to varying forecasts from the Central Bank and the Ministry of Economic Development) due to the sanctions, the departure of Western companies, and restrictions on imports that are critical for certain industries. Next year’s projections include a continued decline, by 3-5%, and no sign of recovery until 2024 – at the level of 1-1.5%. Still, GDP won’t regain its pre-crisis (2019) growth rate.
The period of shrinking GDP and economic depression in Russia is only just beginning, and this is one thing we know for certain, says Fyodor Sidorov, private investor and founder of the School of Practical Investment.
“Depending on how long the sanctions will remain in effect (and that will clearly be a long time), on the progress of import substitution in Russia’s technological industries and mining, depending on people’s incomes, inflation, and some other factors, the current crisis may last at least a decade rather than a year or two,” the expert explained to Invest Foresight. “A real recovery (of both consumption and production) might not occur until after 2025, and even then, it is unlikely to exceed 0.5-1%, which is usually attributed to statistical error. This is stagnation, not growth. It is extremely difficult to make longer forecasts now, as we are not yet certain how low the Russian economy will plunge this year. The fall may be deeper than official forecasts suggest,” he added.