The European Bank for Reconstruction and Development (EBRD) on Wednesday revised its forecast for the Russian economy, saying it now expects growth of 1.5 percent in 2023, despite Western sanctions. The EBRD had previously forecast a contraction of 1.5 percent for the Russian economy.
The EBRD's revised forecast is based on several factors, including rising oil prices and Russia's ability to offset the impact of Western sanctions by exporting to new markets such as China and India.
The EBRD also noted that Russia's economic activity has remained robust, particularly household consumption and government spending on the ongoing conflict.
The EBRD's revised forecast is good news for Russia, as it suggests that the country's economy is more resilient than previously thought. However, the EBRD cautioned that the outlook for 2024 remains uncertain and will depend heavily on how the war in Ukraine and the related economic sanctions evolve.
Ukraine Economy to Grow in 2023, Despite War
The EBRD also revised its forecast for the Ukrainian economy, saying it now expects growth of 1.0 percent in 2023. The EBRD had previously forecast a contraction of 20 percent for the Ukrainian economy.
The EBRD's revised forecast is based on the assumption that more businesses will resume operations and energy supply will improve. However, the EBRD cautioned that the outlook for 2024 remains uncertain and will depend heavily on how the war in Ukraine evolves.
The EBRD's revised forecasts for the Russian and Ukrainian economies are a sign of hope, but it is important to note that the outlook remains uncertain. The war in Ukraine is still ongoing, and Western sanctions could have a more severe impact on the Russian economy in the future.
EBRD Sees Diverging Growth Patterns Among Regions
The EBRD also said that it sees a diverging pattern of growth among its regions in 2023 and 2024. The bank expects the economies of Central Asia to grow strongly, while the economies of Central Europe and the Baltic states are expected to perform more weakly.
The EBRD attributed the diverging growth patterns to the different consequences of energy prices, inflation, and shifting patterns of trade.
The EBRD's forecast is a reminder that the global economy is facing a number of challenges, including the war in Ukraine, rising energy prices, and inflation. However, the bank's forecast also suggests that there is still some optimism for growth in 2023 and 2024.
