What Russian Economy to Face in 2023?

What Russian Economy to Face in 2023?

TeleTrade's leading expert Mark Goikhman, as reported by Rossiyskaya Gazeta, named the difficulties that the Russian economy may face in the coming year. According to the expert, the negative factor for Russia could be the situation established in the energy world market by the end of 2022.

Goykhman believes that the oil embargo will have a negative impact not only on hydrocarbon exports, but also on their production. Yes, Russia made super profits in this segment of the market last year, but in the long term this may not be the case. According to the forecast, which gave back in December 2022, Deputy Prime Minister Alexander Novak, as reported by the Rossiyskaya Gazeta, production in 2023 could be reduced to 490 million tons, i.e. about 5%. In order to avoid such prospects, according to Novak, it is necessary to develop new markets and redirect the released export volumes of oil and petroleum products to Asia, Africa and other regions where they are needed for the development of the economy and where they will be purchased.

Sales of oil and gas play a major role for Russia. It is no coincidence that the U.S. and Western countries imposed a price ceiling on oil exported by Russia by sea as part of the next sanctions. Recall that last year, as reported by Lenta.ru, according to calculations of the Finance Ministry revenues from the sale of oil and gas amounted to 10.7 trillion rubles ($155.63 bln.) That was a preliminary assessment of the federal budget for the first 10 months of 2022, published on the website of the agency in December last year.

At the same time, the head of the Ministry of Finance Anton Siluanov clarified that it is still difficult to say what exactly the impact on the budget will be the introduction of a ceiling on the prices of Russian oil. Meanwhile, on December 5, the price of the export grade Urals, which is the main for Russia, fell to $43.72 per barrel when shipped from Primorsk. This means that Russian oil was then almost twice as cheap as the benchmark Brent grade.

According to FAN, certain difficulties may arise with imports. First of all, it concerns different equipment, technologies, materials and components. The situation is also complicated by the fact that many foreign companies have left Russia, which, in turn, also creates a lot of problems for the production of many goods inside the country. According to experts, this concerns, first of all, mechanical engineering, electronics, chemical industry and a number of other industries. According to Goykhman, in order to establish a balance between expenditures and revenues in the budget, taxes may increase. According to Lenta.ru, we can also expect higher dividend payments by state-owned companies and, possibly, higher borrowing on the domestic market. But despite all these rather serious challenges, according to Goykhman, “the economy will not collapse.” There is a fair amount of reserves and possibilities, thanks to which it will be possible to neutralize the most serious influence of negative factors.

According to Pavel Seleznev, Dean of the Faculty of International Economic Relations at the Financial University under the Government of the Russian Federation, the foundation of the accelerated development, which is necessary in today's realities, should be “a priority build-up of human capital.” Work in this direction is already underway. Seleznev believes that in order to create a layer of leaders, it is necessary to create the conditions for the implementation of their initiatives, developments and inventions. At the same time, according to Seleznev, both at the local and at the federal level all conditions must be created to enable potential leaders to actively move forward. The fact that young talents are paid attention to is evident from various contests, forums and strategic sessions, which attract more and more talented student youth.

Meanwhile, the domestic economy will not collapse this year, not only in the opinion of senior Russian officials, scientists and domestic analysts. Such forecasts are also made by foreign experts. Just a few days ago TASS, quoting the statistical data of the report of the World Bank (WB), reported that this year the gross domestic product (GDP) will decrease by 3,3%. According to foreign analysts, the Russian economy is expected to grow by 1.6% already next year.

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