consumer prices rise
Russia is threatened with a serious economic downturn
04/12/2022, 2:14 p.m
According to the Head of the Audit Office, the Russian government must expect a double-digit slump in the economy this year. GDP could even drop by as much as 15 percent. The last time there was such a sharp fall was as a result of the collapse of the Soviet Union.
The Russian government is expecting the worst economic downturn since 1994 because of the Western sanctions following the Russian invasion of Ukraine. “The official forecast is likely to envisage a contraction of more than ten percent,” said the head of the auditors, Alexei Kudrin, according to the RIA news agency.
That will emerge from the new forecasts by the Ministry of Economy and Finance, said Kudrin, who himself headed the finance department under President Vladimir Putin from 2000 to 2011. A government insider said GDP is expected to fall by between 10 and 15 percent. According to data from the World Bank and the International Monetary Fund (IMF), the last time there was a double-digit minus was in 1994 following the collapse of the Soviet Union.
Moscow originally planned economic growth of 3 percent for 2022, after 4.7 percent last year. Consumer prices, on the other hand, are likely to rise sharply. Analysts surveyed expect an average inflation rate of almost 24 percent in the current year. That would be the strongest inflation since 1999. According to official data, consumer prices in March rose by almost 17 percent year-on-year, after 9.15 percent in February. Sugar cost 44 percent more than a month earlier, onions and washing machines each around half more. The Russian central bank is actually aiming for an inflation rate of 4 percent.
Russia invaded Ukraine on February 24. The western allies then put together sanctions that have since been tightened several times. For example, Russia was largely cut off from the Swift international payment system, and trade in high technology, for example, was severely restricted.