Key rate in RF hits historic high; BoP in Q3 2024; Dynamics of business cycle in Russian economy; Industrial production dynamic in Q3 2024
Year: 2024
Type: preprint
Abstract: On October 25, the Bank of Russia raised the key rate by 200 bp to 21%, the highest value since 2013, i.e. for the entire period of the use of this indicator. The signal regarding further focus of monetary policy remained tight, indicating a highprobability of another hike at the meeting on December 20. According to the results of October, annual inflation slowed down to 8.5%, but the monthly price growth in annual terms remained at the level of September excluding seasonality. Growthof food prices is the main contributor to annual and monthly inflation. In 2025, as demand cools due to tight monetary conditions, inflation will slow down and, according to our forecast, by December it will amount to 5.5% yoy According to the results of Q3 2024, the current account surplus decreased by 1.7 fold compared to Q3 2023 mainly due to the increase in the value volumes of imports and deficit of the balance of primary and secondary incomes. The deficit of thefinancial account balance in Q3 2024 was triggered by the growth of residents’ foreign assets and increase in non-residents’ debts on pending settlements. Under these circumstances, with a reduction in net sales of foreign exchange by Russianexporters in Q3 2024, there was the ruble weakening against major foreign currencies In the summer of 2024, one of the main discussion topics in Russia related to Russia’s high inflation that is largely due to overheated demand. According to our estimates, based on an unobserved components model using mixed frequency data, thecyclical-linked component of Russian GDP peaked at +3.3% in May 2024, and then started to decline, reaching +2% in June 2024. The trend component of the industrial production index showed growth in Q3 2024, which was primarily driven by the manufacturing sector. The extractive sector continues to demonstrate a rather long downward trend due to the extension of theOPEC+ deal on voluntary cut in daily crude oil production. Production and distribution of electricity, gas and water slightly decreased in the period under review. In 2024, the opportunities for Russian regions to reduce the volume of debts on budget loans were expanded both in terms of the regions involved in such a support instrument and in terms of its volume. The government continues to mitigateconditions that allow regions to apply this instrument and to expand the list of industries that can implement investment projects with tax revenues used to reduce the debt. This mechanism promotes the development of infrastructure andinvestment activity, however, so far, the volume of write-offs has a tangible impact on the debt burden only in some regions of the Russian Federation. In 2024, the Russian Federation continued to provide international development assistance (IDA), including humanitarian aid. The authors analyzed measures related to the provision of humanitarian aid based on data from the Russian Federal CustomsService (FCS), open sources of Russian F ederal Executive Authorities (FEA) and their foreign missions, as well as media data. Despite the wide range of identified programs and directions of Russian economic and humanitarian aid, it is not possible to give a full quantitative and cost assessment of such aid. This is due to the incomplete review of programs related to Russian economic assistance, as well as the lack of open official statistical data.
Institution: Gaidar Institute for Economic Policy
Language: English
Domain: Social Sciences
Open Access status: green
OpenAlex ID: W7210275034