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By Lidia Kelly
July 5 (Reuters) – President Vladimir Putin said late Tuesday that Russia’s economy was performing better than expected after Prime Minister Mikhail Mishustin told him gross domestic product growth and inflation were surprisingly positive.
GDP growth could top 2% this year and consumer price inflation is unlikely to rise above 5% yoy, Mishustin Putin said at a meeting in the Kremlin. The International Monetary Fund assumes that the Russian economy will grow by 0.7% this year.
“Our results are, at least for the time being, better than previously expected, better than predicted, shall we say cautiously,” Putin said, according to a transcript on the Kremlin’s website.
Analysts polled by Reuters at the end of June expected GDP growth of 1.2% and inflation of 5.7% in 2023.
Russia’s economy shrank by 2.1% in 2022 and came under particular pressure in the spring of last year when Kiev’s allies imposed sweeping sanctions on Moscow over its military operations in Ukraine.
Russia’s technocrats have helped offset some of the setback by restructuring the economy and boosting it with cash. The Treasury previously said public spending was up 26.5% year-on-year in the first five months of the year.
On Tuesday, Mishustin told Putin he was confident that barring force majeure circumstances, the economy would do well this year.
“Dear Vladimir Vladimirovich (Putin), the country’s economy continues to confidently recover, despite the sanctions, despite all the obstacles imposed on our country,” Mishustin said.
However, the impact of the sanctions was painful as Western financial markets and many export markets were closed to Russian companies and commodities.
Key oil and gas revenues in January and May this year were almost half the same period a year ago, reflecting lower Ural crude oil prices and lower natural gas export volumes.
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Finance Minister Anton Siluanov has repeatedly stated that Russia’s budget deficit will not exceed 2% of GDP this year, although most analysts disagree.
The International Monetary Fund also assumes that Russia will record a significantly larger budget deficit this year.
(Reporting by Lidia Kelly in Melbourne; Editing by David Gregorio and Michael Perry)
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