The World Bank improved its forecast for Russia's GDP growth in 2021 to 4.3 percent percent, the World Bank predicts in its new report, which is at the disposal of “Lenta.ru”. At the same time, the success of the Russian economy is assessed more optimistically than before: according to the May forecast, it was expected that Russia's GDP growth by the end of the year would amount to 3.2 percent.
By the middle of the year, economic activity in Russia exceeded the pre-pandemic peak of 2019. According to the organization, in the second quarter of 2021, GDP growth accelerated (plus 3.5 percent over the previous quarter), and output recovered to pre-pandemic levels. According to analysts, the improvement in indicators is primarily associated with a sharp rise in consumer demand. The services, retail and transportation sectors have contributed most to economic growth.
Removing some of the covid restrictions allowed Russians to visit stores again, triggering a consumer boom. The increase in demand was also helped by the residents' savings accumulated over the crisis year 2020, as well as the rapid growth of lending. The World Bank reports that people have started to shop and use public transport as often as on average in previous years. In addition, domestic tourism began to develop more actively in Russia due to travel restrictions.
Preferential mortgages and direct government support programs for citizens have also spurred the growth of the construction sector. Almost all sectors of the Russian economy exceeded pre-pandemic indicators, with the exception of agriculture and raw materials extraction. Agricultural production was constrained by unfavorable weather conditions, including droughts, and hydrocarbon production was limited by the terms of the OPEC + agreement.
However, in the third quarter, GDP growth slowed down, according to the World Bank report. By the fall, it became clear that a new wave of coronavirus diseases was approaching. New restrictive measures were introduced, and the economic activity of Russians decreased. Falling demand has slowed growth in manufacturing and services.
Despite the improved forecast for 2021, the World Bank's expectations for the next two years have become more muted. Due to the low level of vaccinations and high morbidity, combined with the spread of the new omicron strain, the organization expects a significant slowdown in the Russian economy in 2022 and 2023. According to analysts, in 2022 GDP growth will amount to 2.4 percent against the previous forecast of 3.2 percent, and in 2023 – 1.8 percent against 2.3.