Russia is facing the deepest economic contraction in nearly three decades, with gross domestic product likely to shrink as much as 12% this year under pressure from sanctions imposed by the US and its allies over the invasion of Ukraine, according to an internal forecast by the Finance Ministry.
The government hasn’t given a public outlook yet and the Economy Ministry sees a 8% decline, according to people familiar with the estimates who spoke on condition of anonymity to discuss internal deliberations.
The Finance Ministry’s figure would put the economic pain on par with the turmoil seen in the early 1990s, when Russia’s Soviet-era economy lurched toward capitalism with a contraction not seen since wartime.
The Bank of Russia said April 29 it expects a contraction between 8% and 10% this year. The International Monetary Fund forecast one of 8.5%, while a Bloomberg survey of economists found a median decline of 10.3%.
If the Finance Ministry’s forecast proves accurate, that would erase about a decade of economic growth, according to one person familiar with the forecasts.
Uncertainty about the outlook remains very high as the war continues and the US and its allies discuss further sanctions, including on key exports like oil, the people said.
The press services at the Finance and Economy Ministries didn’t respond to requests for comment.