China news agency, Moscow, July 28 (Tian Bing, Liu Jingyao) According to data released by the Russian Ministry of Economic Development on the 27th, Russia’s gross domestic product (GDP) dropped by 4.0% in the second quarter of this year and by 0.5% in the first half of this year, much better than previously expected. After a year-on-year decline of 4.3% in May, GDP in June decreased by 4.9% year-on-year. A number of Russian experts said on the 28th that the Russian economy will continue to decline in the short term due to Western sanctions.
Western sanctions against Russia have increased Russia’s dependence on the primary industry. According to the Ministry’s data, among all industries, traditional export-oriented industries such as oil production and refining increased slightly year-on-year, restoring production to the level of January. In agriculture, output continued to increase in June. The pharmaceutical and construction sectors performed well, with year-on-year growth of 16.5% and 2.3% respectively, while export-oriented industries and industries with a large proportion, including chemical industry, metallurgy, automobile, light industry and furniture production, still declined seriously.
The Russian Ministry of Economic Development predicts that Russia’s GDP will drop by 7.8% and the inflation rate will be 17.5% in 2022. In a report released by the International Monetary Fund on the 26th, the decline rate of Russia’s GDP forecast in 2022 was adjusted to 6% and 3.5% in 2023. Compared with the forecast data in April, the organization raised Russia’s GDP forecast data by 2.5 percentage points this year and lowered its GDP forecast data by 1.2 percentage points next year.
Mikhail, president of the Russian State-owned Development Bank, said on the 28th that according to data analysis, it is estimated that by the end of 2022, Russia’s GDP will drop by 5%, the inflation rate will reach 13%, and the annual benchmark interest rate of the Russian central bank will drop to 7%. The exchange rate of the ruble against the US dollar will reach 69 -70 rubles at the end of the year, and the price of oil will drop to 70 US dollars per barrel. "The decline of the Russian economy is not limited to 2022, but will continue to decline in 2023. This is a major crisis we are currently facing."
Melnikov, head of the Russian Energy Development Center, said that the current domestic economic situation is "understandable". Under western sanctions, the export-oriented industries that are least affected will take the lead in recovery, while the automobile industry and metallurgical industry cannot return to their previous levels. In the medium term, due to the need to replace foreign products that cannot be imported, the share of Russian domestic manufacturing industry will begin to increase. However, due to limited functions, there are still many deficiencies in the quality and technical level of manufacturing industry. For example, Russian-made cars cannot be equipped with airbags, anti-lock braking systems and automatic transmissions.
Goihman, chief analyst of Tele Trade in Russia, said, "The increasing role of raw material exports, the decrease in imports of high-tech equipment and materials, and the decrease in investment by developed countries in Russia have all undermined the possibility of developing high-tech advanced industries in Russia. For the time being, these factors cannot be completely replaced by other imports or domestic production. "
Aleksandrov, head of the analysis and research department of Russian investment company IVA Partners, believes that under the current circumstances, it is difficult to improve the living standards of Russian people. According to statistics from the Russian Statistical Office, domestic real wages fell by more than 6% year-on-year in May. According to the results of the first half of the year, the decline in citizens’ income may reach 7%. "Under the cyclical crisis, it is impossible to expect to improve the living standards of citizens at present, and the whole world economy is experiencing a serious crisis."
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