MOSCOW (FFN) – The Russian central bank has announced that imports to Russia are expected to decline this year due to problems with cross-border payments and logistical challenges caused by Western sanctions. This information was shared on Thursday in the bank’s draft guidelines for monetary policy for the next three years, according to Reuters.
“Imports will decline this year due to payment and logistical issues caused by sanctions,” the central bank stated. However, it also noted that the situation is expected to improve in the medium term. “These restrictions will be short-term. In the coming years, we anticipate a gradual recovery in imports, supported by the diversification of supply sources and the development of new logistical chains,” the bank added.
This outlook was announced a day after Russia reported significant economic growth in the first half of 2024, despite the ongoing pressure from Western sanctions. Preliminary estimates show that Russia’s Gross Domestic Product (GDP) increased by 4.6% year-over-year, a significant improvement compared to the 1.8% growth in the first half of the previous year. This growth has been largely attributed to a substantial increase in capital investments during both the first and second quarters.
| Indicator | H1 2023 | H1 2024 |
|---|---|---|
| Year-over-Year GDP Growth (%) | 1.8% | 4.6% |
| Key Interest Rate (%) | 16% | 18% |
| Inflation (%) | 9% | (projected 13-15% by year-end) |
Given these positive economic results, Deputy Minister of Economy Polina Kryuchkova stated, “We expect better data for 2024 than we initially forecasted in April.”
However, the central bank has also warned of economic overheating, which led to an increase in the key interest rate by 200 basis points to 18% in July. The bank emphasized that maintaining a tight monetary policy for an extended period will be necessary to achieve sustainable inflation reduction. Current inflation stands above 9%, and in a worst-case scenario, it could accelerate to 13-15% by the end of next year. The central bank has set its inflation target at 4%.
Key Words: Russia, central bank, imports, GDP, inflation, interest rate, sanctions
