Analysts polled by the Central Bank of Russia (CBR) in its July macroeconomic survey have again upgraded their outlook on the key rate, inflation and the country’s GDP growth, according to the regulator’s website.

The main takeaways are inflation will come in at 6.5%, higher than the previous estimate of 5.6%, and that growth this year will be stronger at 3.2%, more than the 2.8% previously forecast, but less than the 3.6% of growth last year.

In particular, inflation forecast has been upgraded to 6.5% for 2024 (+1 p.p. compared to May figures) and to 4.5% for 2025 (+0.3 p.p.). Analysts expect inflation to return to the target in 2026 and to remain at this level further on, TASS reported on July 17.

Analysts’ expectations on the average key rate have been upgraded over the whole horizon - to 16.8% per annum for 2024 (+0.9 p.p.), to 15% per annum for 2025 (+2.6 p.p.) and to 10.6% per annum for 2026 (+1.2 p.p.). The forecast for the end of horizon is 8% per annum. Median estimate of neutral key rate remained intact at 7.5% per annum.

GDP growth forecast for 2024 has been upgraded by 0.3 p.p. to 3.2% -- less than last year’s 3.6% growth. Analysts expect GDP to grow by 1.7-1.8% in 2025-2027. Median estimate of long-term growth rates has slightly increased to 1.6% (+0.1 p.p.). According to analysts’ forecasts, GDP growth in 2027 compared to 2021 will total +11.1%.

Moreover, analysts expect unemployment to go down to 2.6% in 2024 (-0.2 p.p.), up to 2.8% in 2025 (-0.2 p.p.) and return to the level of 2023 of 3% further on.

The outlook on the dollar/ruble exchange rate is 90.1 rubles per dollar for 2024, 95 rubles per dollar for 2025, 97.2 rubles per dollar for 2026, 98.9 rubles per dollar for 2027 (stronger by 1.1-2.4% compared to May).

The price of Brent crude oil is expected at $84 per barrel on average in 2024. Further on the price will decline and equal $80 per barrel in 2025 and $75 per barrel in 2026-2027 (outlook unchanged).

Below are the conclusions of the CBR’s July macroeconomic survey: The ranges of analysts’ forecasts for the next years (see the shaded areas in the charts) have narrowed for most indicators and somewhat widened for inflation and nominal wages. At the same time, the ranges for GDP growth, unemployment rate, $/RUB exchange rate, exports, imports, Brent oil price are widening by the end of the forecast period.

Inflation: Inflation forecast has been raised to 6.5% in 2024 (+1.0 pp compared to the May survey) and to 4.5% in 2025 (+0.3 pp). Analysts expect that inflation will return to the target in 2026 and remain at this level further on.

Key rate: Analysts have raised the average key rate forecast over the entire forecast horizon: to 16.8% per annum (+0.9 pp) for 2024, to 15.0% per annum (+2.6 pp) for 2025, to 10.6% per annum (+1.2 pp) for 2026. Analysts expect the key rate to reach 8.0% per annum by the end of the forecast horizon. The median estimate of the neutral key rate is unchanged at 7.5% per annum.

GDP: Forecast for 2024 has been raised by 0.3 pp to 3.2%. Analysts expect GDP to grow by 1.7-1.8% in 2025-2027. The median estimate of the long-term GDP growth rate has slightly increased to 1.6% (+0.1 pp). According to analysts, the GDP growth in 2027 to the 2021 level will total +11.1%.

Unemployment rate: Analysts expect that unemployment will decline to 2.6% (-0.2 pp) in 2024, increase to 2.8% (-0.2 pp) in 2025 and then return to the 2023 level of 3.0%.

Nominal wages: Analysts have once again raised their forecast for nominal wage growth to 15.6% (+2.8 pp) in 2024, followed by a deceleration to 8.3% (+0.5 pp) in 2025, to 6.9% (+0.1 pp) in 2026 and to 6.4% by the end of the forecast horizon. Calculations based on analysts’ forecasts of nominal wages and average CPI suggest that real wages will increase by 7.3% in 2024, by 3.0% in 2025, by 2.4% in 2026 and by 2.3% in 2027. Accordingly, by the end of the forecast horizon, real wages will be 25.8% higher than in 2021.

 

Consolidated budget balance: Analysts expect consolidated budget deficit of 1.3% of GDP in 2024, followed by a decline to 1.0% of GDP in 2025, to 0.8% of GDP in 2026 and to 0.7% by the end of the forecast horizon.

Exports of goods and services: Analysts have somewhat lowered their estimates over the entire forecast horizon: to $471bn (-$8bn) in 2024, to $477bn (-$9bn) in 2025 and to $480bn (-$10bn) in 2026. The estimate for 2027 is $491bn, which is 11% lower than exports in 2021.

Imports of goods and services: Forecasts have also been somewhat lowered over the entire forecast horizon: to $378bn (-$5bn) for 2024, to $389bn (-$6bn) for 2025 and to $398bn (-$6bn) for 2026. The estimate for the end of the forecast horizon is $407bn, which is 7% higher than imports in 2021.

$/RUB exchange rate: Analysts’ forecast for 2024 is 90.1 rubles per dollar, 95.0 rubles per dollar for 2025, 97.2 rubles per dollar for 2026 and 98.9 rubles per dollar for 2027 (stronger by 1.1-2.4% compared to the May survey).

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Brent oil price: No changes in forecast. According to analysts’ expectations, the average Brent oil price will total $84 per barrel in 2024. The price will then decrease to $80 per barrel in 2025 and to $75 per barrel in 2026-2027.