World Bank Predicts Mild Recession in Russian Economy Due to Energy Exports Despite Embargo - Latest Economic Outlook for Emerging Countries and Advanced Economies

2023-06-07 02:52:32

The World Bank (WB) expects a mild recession in the Russian economy this year, according to a forecast revised upwards Tuesday due to energy exports which are maintained despite the embargo on Russian gas and oil.

Russia is expected to experience a slight contraction in its GDP this year, of around 0.2%, according to the latest forecasts from the institution, which published an update to its report on the world economic outlook on Tuesday. A very sharp increase is expected compared to previous forecasts, dating from last January, according to which the WB predicted a contraction of 3.3% of the Russian economy. However, this remains lower than the latest forecasts from the International Monetary Fund (IMF), which for its part forecast in mid-April a slight growth of around 0.7% for 2023.

According to the WB, this improvement in the Russian economic situation is due to the “continuous flow of exports” of gas and oil, the country having managed to “redirect its oil exports to new destinations without impacting the volume”. If exports to Europe fell sharply, according to OECD data taken over by the WB, they were largely offset by a sharp increase to India and other regions of the world as well as, to a lesser extent, to China.

This much weaker contraction of the Russian economy now expected, and also stronger Chinese growth than anticipated in January (5.6% now expected, against 4.3% initially), mainly supports the expected growth of emerging countries, and more broadly global growth.

The WB now expects it at 2.1%, against 1.7% expected in January, then at 2.4% in 2024 (against 2.7% initially anticipated). In mid-April, the IMF for its part announced growth of 2.8% in 2023, then 3% in 2024.

As for the advanced economies, the United States seems to be in a position to avoid a recession this year, with an expected growth of 1.1% (+0.6 percentage points), which should slow in 2024 to 0 .8% (-0.8 percentage points). Conversely, the euro zone should post slight growth in 2023 (0.4%), whereas the WB was originally expecting zero growth, before accelerating in 2024 to 1.3% (-0 .3 percentage points).