The Bank of Russia decided to maintain the key rate at 16% per annum at its first meeting in 2024, indicating that it is too early to judge the sustainability of the emerging disinflationary trends.
"On 16 February 2024, the Bank of Russia Board of Directors decided to keep the key rate at 16.00% per annum. Current inflationary pressures have eased compared with the autumn months but remain high. Domestic demand is still outstripping the capabilities to expand the production of goods and services. A judgement on the sustainable nature of emerging disinflationary trends would be premature. The Bank of Russia’s monetary policy is set to solidify disinflation processes unfolding in the national economy," the regulator said.
At the same time, the Bank of Russia raised its forecast for the average key rate for 2024 from 12.5-14.5% to 13.5-15.5%. In 2025, the rate is expected to be 8-10%, against the previous forecast of 7-9%, the forecast for 2026 reached 6-7%.
The Bank of Russia raised its forecast for Russian economic growth in 2024 from 0.5-1.5% to 1-2%. At the end of 2023, the country’s GDP grew by 3.6%, which is higher than the regulator’s forecasts. For 2025 and 2026, the regulator maintained its GDP growth forecast at 1-2% and 1.5-2.5%, respectively.
It was noted that the growth of the Russian economy in 2023 was higher than the regulator previously predicted. "The Russian economy grew at an annual rate of 3.6% in 2023, exceeding the Bank of Russia’s previous forecast. Given increased inflationary pressures, this means that domestic demand is still considerably outstripping the capabilities to expand the production of goods and services. At the same time, a growing propensity of households to save, a deceleration in consumer activity growth, and cooling demand for imports are increasingly working to put the economy back on a balanced growth path. This is set to be a protracted process," the regulator said.
The Bank of Russia added that "The return of inflation to target in 2024 and its further stabilisation close to 4% assume that tight monetary conditions will be maintained in the economy for a long period. According to the Bank of Russia’s forecast and given the monetary policy stance, annual inflation will decline to 4.0-4.5% in 2024 and will stabilise close to 4% further on."
The Bank of Russia will hold its next key rate review meeting on March 22, 2024.
Central Bank chief says base-case scenario does not suggest economic recession
The Russian Central Bank’s base-case scenario does not suggest an economic recession, the regulator’s Governor Elvira Nabiullina said.
"Rates should be raised in proper time to avoid the recession risk, to make sure that the imbalance between growth of demand and the lagging growth of goods and services production demand does not lead to constant sharp boost of inflation that would be necessary to reduce then by higher and longer increases in rates, which could lead to recession. Our base-case scenario does not imply recession," she told a press conference after the regulator’s board meeting.
Putin hails globalization as anti-poverty weapon - 2021 article
Russian President Vladimir Putin on Wednesday credited globalization as a factor in having driven economic growth in developing countries over recent decades.
In a speech at a World Economic Forum event, Putin pointed to poverty-alleviation efforts that had benefited more than a billion people over that period.
Even with the deep economic crises that broke out in 2008 and 2020, the past 40 years have been "super successful" for the global economy, the Russian leader said. Since 1980, global per capita GDP has doubled in terms of real purchasing power parity, he told the World Economic Forum Virtual Event of the Davos Agenda.
Putin cited the case of China, where the number of people with lower incomes went down dramatically from 1990 down to recent years. He added:"This is definitely China's success."
In Russia, the number of those in poverty has fallen from 64 million in 1999 to about 5 million now, he said.
Russian experts agree that China's poverty-alleviation efforts have amounted to a great achievement.
Sergei Luzyanin, a professor at the Moscow State Institute of International Relations under the Russian Foreign Ministry, said China's poverty program has been implemented on an unprecedented scale.
"The growth of Chinese prosperity, the growth in GDP per capita and the rate of the implementation of the anti-poverty program are impressive and prove the high efficiency of the efforts undertaken by the Chinese leadership," Luzyanin said
A vital role
Oleg Timofeev, associate professor at the Peoples' Friendship University of Russia, said China's fight against poverty has played a vital role in its economic development.
In Putin's first speech at the World Economic Forum Davos Agenda in 12 years, he underlined the need for nations and regional blocs to coordinate on policies in order to avoid conflicts amid global tensions.
He called for joint efforts to strengthen global institutions that bear responsibility for ensuring stability and security in the world and for making the rules of conduct for the global economy and trade.
"It is obvious that the era associated with attempts to build a centralized and unipolar world order is over," Putin said.
He said different regions of the world have emerged with their own political and social characteristics during their economic development.
However, trade barriers, sanctions and other restrictions are being used by some countries to pressure others that do not agree to be "obedient", Putin said.
No comments:
Post a Comment