The Russian Federal Statistics Service (Rosstat) announced on May 17 that the country's GDP decreased by 1.9% in the first quarter compared to the same period last year.
The decline in the quarter was mainly due to a decline in retail and wholesale sales. In contrast, manufacturing, agriculture and construction posted record growth, Rosstat said. The economy grew 3% in the first quarter of 2022.
Inflation fell to 3.5% in March and continued to fall to 2.3% in April. The unemployment rate is currently low at 3.5%, but mainly due to a shrinking labor force.
Previously, the Russian Ministry of Economy estimated that the country's GDP fell by 2.2% in the first quarter. The Russian Central Bank forecast that figure to be 2.3%. In the last quarter of last year, Rosstat said that Russia's GDP fell by 2.7%.
Last year, the Russian economy did not collapse as predicted, but GDP still shrank by 2%. Western sanctions imposed on Russia after the conflict in Ukraine have caused much damage to the country.
The International Monetary Fund (IMF) is among those forecasting growth for Russia this year. However, it has also warned that isolation and falling energy revenues could hurt Russia’s economic growth in the coming years.
The International Energy Agency (IEA) said in March that while Russia’s crude oil exports were at their highest level since the start of the war, oil revenues had fallen by 43% compared to the same period last year. This directly affected the Russian budget, which had a deficit of 3.4 trillion rubles ($42.3 billion) in the first four months of the year.
However, the Russian Finance Ministry said the deficit was partly due to rising costs, especially military spending. Experts predict that Russia's budget deficit could be equivalent to 3-4% of GDP this year, higher than the target of 2%.
Ha Thu (according to Reuters, The Moscow Times)
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