The Russian economy is experiencing unexpected growth, with Prime Minister Mikhail Mishustin reporting a 4.7% increase in GDP for the first half of 2024 compared to the same period in 2023. This growth has been attributed to various sectors, including manufacturing, construction, and retail, which have all shown significant increases. For instance, the manufacturing sector saw an 8% rise, while retail trade surged by 8.8%. Notably, some industries, such as the production of fabricated metal products and computers, reported double-digit growth rates of 36.1% and 35%, respectively.
Forecasts from international organizations have also become more optimistic regarding Russia's economic prospects. The International Monetary Fund has adjusted its growth prediction from 2.6% to 3.2%, while the European Commission has raised its estimate from 1.6% to 2.9%. The Central Bank of Russia has the most optimistic outlook, expecting a growth rate of 3.5% to 4% by the end of the year.
In terms of budgetary performance, Russia's state treasury has seen a 38% increase in revenue during the first half of 2024, amounting to 17.1 trillion rubles. This surge is largely due to rising oil and gas prices, which have contributed to a 69% increase in revenues from energy exports. Non-energy-related budget revenues have also grown significantly, driven by a 34% rise in income tax. Despite these increases, the budget deficit remains manageable, projected to be around 1.1% of GDP by the end of the year.
- The growth in the Russian economy is underpinned by several supporting factors. Domestic demand and consumption continue to rise, aided by government investments in large-scale projects. Exports are also outpacing imports, contributing positively to the GDP. Experts suggest that while the growth rate may slow in the latter half of the year due to a higher comparative base, the overall trajectory remains positive. The Ministry of Finance has indicated that the increase in budget revenues will allow for enhanced funding for social and infrastructure projects, essential for sustaining economic growth. Additionally, while the budget deficit is projected to exceed revenues, it is not seen as a critical issue, as many developed nations operate under similar conditions.
