The Russian economy will continue to grow despite sanctions thanks to higher-than-expected energy revenues, the World Bank said in its latest Global Economic Prospects report on Tuesday.
The country’s growth is expected to turn positive in 2024, but will remain modest at 1.2%.
According to the outlook, output is expected to be 0.2% lower this year, which is a 3.1 percentage point upgrade from the bank’s January forecast.
“This change mainly reflects the unexpected resilience of oil production and higher-than-expected growth momentum from 2022,” the World Bank stated. It noted that in the face of Western sanctions, Moscow has altered the destination of its oil exports “without a material change in volume.”
The Washington DC-based institution cautioned, however, that a continued contraction in export volumes and weak domestic demand will weigh on activity.
The Russian government has maintained a positive outlook for the economy. Prime Minister Mikhail Mishustin has predicted that, by 2024, the Russian economy will be able to overtake developed countries in terms of growth.
The World Bank also raised its 2023 global growth outlook, saying the US, China and other major economies have proven more resilient than forecast. It warned that higher interest rates and tighter credit could negatively affect next year’s indicators.
Real global GDP is forecast to climb 2.1% this year, from the previously projected rise of 1.7%, but well below the 2022 growth rate of 3.1%. The World Bank slashed its 2024 global growth forecast to 2.4% from 2.7% in January, citing repercussions of central bank monetary tightening.
According to World Bank Chief Economist Indermit Gill, two-thirds of developing economies will see lower growth this year than in 2022.
“Even by the end of next year, a third of the developing world will not beat the per-capita income levels that they had at the end of 2019,” Gill told reporters. “That’s five lost years for nearly a third of the world’s countries.”
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