Russia raises GDP growth outlook as economy recovers faster than expected

The Russian Ministry of Economic Development and Trade has raised its forecast for the growth of the country’s economy in 2021, despite new administrative restrictions on business activity due to the third wave of the pandemic.

The ministry now expects the country’s gross domestic product (GDP) this year to be 3.8% instead of the previously expected 2.9%.

“The old scenario conditions were formed in March based on the data for January-February. Now the data for April-May [shows] the economy is recovering faster than we expected [...] We expect to reach the pre-crisis level this month,” a representative of the ministry told reporters on Friday. He added that the potential for economic recovery has not yet been exhausted.

The improvement in the ministry’s forecasts follows a sizeable GDP growth shown by the country’s economy in both April and May this year. Both months saw a year-on-year growth of over 10%, which shows Russia’s economy is recovering from the Covid-19 pandemic at a steady pace.

The growth trend seems to have been largely unaffected by the newly imposed administrative restrictions on business activity in a number of Russian regions due to the third wave of Covid-19. Amid rising infection rates and mortality from coronavirus, the toughest restrictions were introduced in Moscow, including the closure of food courts and zoos, as well as restricted access to restaurants for unvaccinated citizens. Moscow accounts for nearly 21% of the total regional product in Russia, Rosstat data showed.

The forecast GDP growth for 2021 will be the fastest upsurge Russia’s economy has seen since 2012, while the average annual growth in 2014-2019 was less than 0.5%, with a dramatic 3% decline in 2020.

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