(Bloomberg) — Russia’s economy is on track for two consecutive years of contraction for the first time since the collapse that followed the dissolution of the Soviet Union three decades ago, according to a Bloomberg survey.
As President Vladimir Putin’s war in Ukraine enters its second month, the dire economic costs are becoming clear after the invasion unleashed a wave of sanctions and caused many businesses to flee the country.
Gross domestic product is higher than 9.6% in 2022 and 1.5% in 2023, said Bloomberg event to 24 analysts held between March 18 and 23. Before the attack on Ukraine in late February, the economy was poised to expand for a second year.
In another drastic revision of the outlook, inflation is now estimated to average 20% this year, a pace that would be the fastest in about two decades. The central bank will have to keep its key rate at 20% at least until second-quarter penalties, according to the survey.
The invasion of Ukraine used the collapse of the ruble and threw global supply chains and commodity prices into chaos, while demonstrating the massive exit of companies from the country. To punish Russia, foreign governments have imposed trade and financial sanctions, frozen central bank reserves and excluded many of its banks from the SWIFT international payment system.
Russia has tried to isolate its economy and its markets with capital controls, doubling interest rates and other emergency measures, all of which will hurt growth.
Russia Seen On Course For Deep Two-Year Recession, 20% Inflation
More stories like this are available at bloomberg.com
©2022 Bloomberg LP