By John Meyer, consultant in financial affairs – Eurasia Business News, September 2, 2024. Article No 1205.

Smolenskyi Boulevard, Moscow, 2021– Photo credit : Swann Collins.

The Russian Finance Minister Anton Siluanov said that the estimate of GDP growth in 2024 has been improved to +3.9% (the latest forecast was +2.8%). According to him, revenues from changes in the tax system are expected in 2025 at the level of 2.7 trillion rubles, the budget deficit at the end of the year is 1.1%.

This estimate, revealed on August 30, shows an improvement over the previous year’s growth rate of 3.6% and reflects a more optimistic outlook for the Russian economy than earlier forecasts suggested.

A significant driver of GDP growth has been the rise in domestic consumption, as real disposable income of Russians (net of inflation and mandatory payments, such as taxes and interest on loans) increased by 9.6% in April-June, according to Rosstat agency data. In addition, public consumption rose sharply, contributing to overall economic activity.

“In the first half of the year, the dynamics of economic growth amounted to 4.7% of GDP, which is a very good indicator. We see that investments are growing – about 8%, real disposable incomes of the population are growing,” Anton Siluanov said in an interview with TV channel Russia 24.

“Estimates for the dynamics of the economy for this year are also higher than we initially included in our forecasts. The estimate of economic growth for the current year is 3.9%. Last year this figure was 3.6%, it was high, this year we will exceed it,” the minister added.

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“Revenues this year increased by almost 5 trillion rubles, to be exact – 4.7 trillion rubles higher than in the corresponding period last year, and this is due to the growth of both oil and gas revenues and revenues received from the domestic economy,” said Mr. Siluanov.

“Next year, we plan to receive 2.7 trillion rubles from changes in the tax system alone. All this money will be used for the tasks set by the president in the address, will be used to ensure the priority obligations of the state,” the minister said and added that in September the draft budget will be prepared and submitted to parliament.

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“The budget will be based on budget rules and principles. Now, together with the Ministry of Economic Development, we are working on forecasts and budget parameters, determining priorities. This, first of all, will be the provision of resources for the President’s Address, where much attention is paid to supporting families with children, people who need state assistance, and technological development,” said Anton Siluanov.

The 3.9% growth forecast for 2024 suggests that the Russian economy is recovering and adapting despite ongoing challenges, including sanctions and inflationary pressures. The Russian Federal State Statistics Service (Rosstat) has also indicated a provisional GDP growth of 4.6% for the first half of 2024, reinforcing the government’s optimistic projections.

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© Copyright 2024 – Eurasia Business News. Article no. 1201.