Russia's GDP fell in the first quarter

The Russian Federal Statistics Service (Rosstat) announced on May 17 that the country's GDP decreased by 1.9% in the first quarter compared to the same period last year.

The decline this quarter was mainly due to a decline in retail and wholesale sales. In contrast, manufacturing, agriculture and construction recorded record growth, Rosstat said. The economy grew 3% in the first quarter of 2022.

Inflation fell to 3.5% in March and continued to fall to 2.3% in April. Unemployment is now low at 3.5%, but mainly due to a shrinking workforce.

Previously, the Russian Ministry of Economy estimated that the country's GDP fell by 2.2% in the first quarter. The Russian Central Bank forecast this figure to be 2.3%. In the last quarter of last year, Rosstat said that Russia's GDP fell by 2.7%.

Last year, the Russian economy did not collapse as predicted, but GDP still fell by 2%. Western sanctions imposed on Russia after the conflict in Ukraine have caused a lot of damage to the country.

The International Monetary Fund (IMF) is among those forecasting growth for Russia this year. However, it has also warned that isolation and falling energy revenues could hurt economic growth in the coming years.

The International Energy Agency (IEA) said in March that while Russia’s crude oil exports were at their highest level since the start of the war, oil revenues were down 43% year-on-year. This directly affected the Russian budget, which posted a deficit of 3.4 trillion rubles ($42.3 billion) in the first four months of the year.

However, the Russian Finance Ministry said the deficit was partly due to increased costs, especially military spending. Experts predict Russia's budget deficit could be equivalent to 3-4% of GDP this year, higher than the target of 2%.

Ha Thu (according to Reuters, The Moscow Times)

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