By Andrei Skvarsky.
Moscow-based investment bank Renaissance Capital believes that deceleration of economic growth in Russia to around 1 per cent in 2025 forecast by the central bank is a more likely scenario than a slowdown to 2.5 per cent predicted by the Economic Development Ministry.
Renaissance largely attributes the relatively fast gross domestic product growth of 3.6 per cent for 2023 and a projected similar percentage for 2024 to a government stimulus package and a surge in consumer demand that came earlier than the investment bank would have anticipated.
But Renaissance does not expect either factor to be around in 2025.
“The monetary policy has been tightened heavily, and in addition we expect that the ‘borrowing’ of demand from the future will have used up its effect, and meanwhile we also expect the fiscal policy to normalise next year – it’ll be neither restrictive nor stimulative,” Renaissance chief economist Oleg Kuzmin told EmergingMarkets.me by email.
At an earlier news conference in Moscow, Kuzmin said Renaissance believed there was 65 per cent chance of materialisation of the central bank scenario, which he described as a “hard landing”, and 35 per cent chance of the economy following the Economic Development Ministry’s scenario, which he called a “soft landing”.
The ministry bases its forecast on expectations of a productivity increase in the economy.
However, Renaissance does not expect a major rise in productivity and believes that the “soft landing” scenario, if it does materialise, would be the result of “significant and prolonged effects” of the former stimulus package, Kuzmin told the news conference.