Russian Central Bank presented macroeconomic development scenarios for 2023

The Russian Parliament adopted a resolution "On the Main Directions of the Unified State Monetary Policy for 2023 and the period of 2024 and 2025". The document was presented by Elvira Nabiullina, Chairman of the Russian Federation Central Bank.

In the baseline scenario, the Central Bank assumes that the sanctions imposed on the Russian economy will continue over the next three years and the process of adjusting the economy to the restrictions may take up to 1.5 years.

The aggregate production release will decline and inflation will temporarily be higher. Then, as the economy transitions to a new equilibrium, economic activity will begin to recover. Its growth rates during the period of structural adjustment will be small, but after 2025 they can accelerate due to the formation of new production relationships in the economy, the improvement of the skills of the workforce, the efficient use of capital, and the commissioning of new means of production.

The refusal of international financial institutions to work with Russia is "unpleasant, but will not destroy the Russian financial market," Elvira Nabiullina noted, since the country "has its rating industry, a national reinsurance company."

According to the base scenario, annual inflation will decrease to 5-7% in 2023 (by the end of 2022, according to the base scenario, inflation will be 12-13%) and reach the target in 2024 (about 4%). Inflation in Russia is now not much different from the rate of growth in prices in comparable economies, although the country has experienced a larger shock, said the Chairman of the Central Bank.

A gradual decline in inflation will require maintaining the key rate in the range of 6.5–8.5% in 2023 and 6–7% in 2024. As inflationary pressure eases, the Bank of Russia will reduce the key rate, returning it to the long-term neutral range of 5–6% per annum.

The main risks for the baseline scenario are related to the deterioration of the geopolitical background and the situation in the global economy as a whole.

The Chairman of the Central Bank noted that lending is growing in response to the increased needs of the economy, and banks will cope with this.