Crédito y Caución forecasts a 3.3% contraction of the Russian economy in 2022, followed by another 2.0% decline in 2023. According to the latest Economic Outlook released by the credit insurer, the recession in the past year will be less severe than previous estimates, mainly due to the resilience of fixed investment despite Western sanctions and the negative impact of the war on business confidence.
Some sectors have been hit hard by the sanctions, such as trade, wholesale and retail, and manufacturing. Automobile production in particular faces the withdrawal of foreign manufacturers and a shortage of inputs. Among the best performing sectors are construction and finance.
Despite increased war spending, oil and gas exports continue to bring in substantial revenues to the public coffers. According to Crédito y Caución's forecasts for 2022, 2023 and 2024, the public deficit will be slightly above 1%. Revenues from energy exports, together with the contraction in imports, are expected to boost the current account surplus to 12.7% of GDP in 2022, up from 6.9% in 2021.
The rouble has managed to regain its value after a sharp depreciation of close to 45% against the dollar when war broke out in Ukraine. Capital controls and a large current account surplus have allowed the Russian currency to recover all of its lost value and to trade at levels higher than in the weeks prior to the invasion of Ukraine. These controls include compulsory sales of foreign currency by companies, limited convertibility and a freeze on foreign investments that prevents their liquidation. Crédito y Caución expects some depreciation to occur in 2023 as a result of the EU ban on Russian oil and oil derivatives.
Although unemployment remains low, the mobilisation of troops will strain labour market dynamics, due to the departure of skilled workers. After surpassing 17% in April, inflation has eased through 2022. The Central Bank of Russia has cut the policy rate significantly since February, when it raised it sharply to 20%. Monetary policy is likely to ease further in 2023.