IMF increases Russian growth forecast in 2023 on deficit-fueled government spending

Washington, United States: The International Monetary Fund increased its estimate of Russian economic growth in 2023 on Tuesday, anticipating that government expenditure fuelled by budget deficits will help offset the rising costs of Russia’s conflict in Ukraine. Yet over the longer term, it is anticipated that the Russian invasion will have a considerable impact. According to the IMF, the Russian economy will be around 7 per cent smaller than pre-war projections would have predicted. The predictions were given by the IMF’s deputy director in the Research Department, Petya Koeva Brooks, during a press briefing at the launch of the World Economic Outlook (WEO) report on Tuesday. After contracting by 2.1 per cent last year, the IMF now sees Russia’s economy growing by 0.7 per cent this year, up 0.4 percentage points from a previous forecast in January. It is then forecast to grow by 1.3 per cent in 2024, down 0.8 per centage points from the earlier forecast. The IMF raised its forecast for 2023 on the “very strong source of revenues” for the economy from high energy prices last year and during the first half of this year, IMF chief economist Pierre-Olivier Gourinchas said at the press conference. “In addition to that there was a very strong fiscal impulse in Russia in ‘22 and continuing into 2023,” he said. Much of the fiscal spending at the end of last year was related to military expenditures, with the effect expected to carry on into 2023, Koeva Brooks said. As oil revenues shrink and government spending continues, the IMF expects Russia’s budget deficit will reach 6.2 per cent of GDP this year, according to a spokesperson. This would be almost three times the size of last year’s budget deficit. Russia’s current account surplus is also predicted to decline sharply to 3.6 per cent of GDP this year from 10.3 per cent a year earlier, due to much weaker terms of trade, lower energy volumes, and a recovery of imports, the spokesperson said. Read all the Latest News , Trending News ,  Cricket News , Bollywood News , India News and Entertainment News here. Follow us on Facebook, Twitter and Instagram.