The European Bank for Reconstruction and Development (EBRD) lowered its forecast for Russia's economic growth in 2022 to 3.5% in 2022 but maintained its forecast for a 3% decline in GDP in 2023.

Forecasts for Russia’s economic growth outlook have become a topic of hot debate after the International Monetary Fund (IMF) issued a controversial forecast in February saying Russia’s economy would grow by 0.3% -- faster than that of both Germany and UK.

The Central Bank of Russia (CBR) recently updated its outlook for 2023, but is hedging its bets by forecasting growth will be in the range of -1% to +1%. Russia’s Ministry of Finance (MinFin) and Ministry of Economy forecast a contraction of -0.6% and -0.8% respectively (chart)

Eh final results for Russia’s 2022 are not yet in but estimates of the final results ary much less than the 2023 growth outlook. The EBRD’s previous prediction for 2022, given in September 2022, expected a 5% drop in Russian economic growth in 2022 and a 3% decline in 2023.

The new report attributes the better than expected economic performance in 2022 to high energy prices, which mitigated the impact of the sanctions.

However, the EBRD anticipates a contraction of the economy in 2023 due to declining oil prices, the ongoing impact of the sanctions, and fiscal pressures. The bank also predicts a 1% expansion in Russian GDP in 2024.

The report also highlights the impact of the Russian economy on Belarus, noting that the Belarusian economy is more dependent than before on the Russian economy. The bank predicts a 4.7% decrease in Belarus' GDP in 2022, a 1% decline in 2023, and a moderate recovery of 1.3% growth in 2024.