The downturn in the Russian economy could be as little as 3.5-5% in 2022, Sber CIB analysts believe.
Graph of annual growth / recession of the Russian economy
“Business activity in Russia is declining much more slowly than expected at the beginning of the crisis,” investment bank experts write. “Business is energetically building new logistics, reorienting itself to new markets and looking for new suppliers. The geography of Russian foreign trade is changing significantly and very quickly: trade with the EU is declining in favor of China, Turkey, India and other „friendly” countries. Now we expect a smaller decline in the Russian economy – by 3.5-5%”.
According to Sber CIB experts, several factors speak in favor of this opinion:
- The monthly rate of economic slowdown has slowed down. In May, seasonally adjusted, economic activity decreased by only 0.5% compared to April. This is the best result since the beginning of the crisis, as in February, March and April the decline was respectively 1%, 1.1% and 1.9% per month.
- Exports have not fallen as much. For the second quarter of 2022, the economy contracted by 4.0-4.5%. According to analysts, this was facilitated by lower consumption and reduced stocks. Net exports should have risen significantly as the volume of imports declined much faster than exports. This picture is typical for all crises in Russia.
- As a baseline scenario, Sber CIB economists expect a 5% decline in GDP in 2022. A more optimistic development of events is also possible, in which the decline in the third quarter will slow down sharply. In this case, at the end of the year, GDP will decrease by 3.5%.