China News Agency, Moscow, July 28 (Tian Bing and Liu Jingyao) According to data released by the Russian Ministry of Economic Development on the 27th, Russia's gross domestic product (GDP) fell by 4.0% year-on-year in the second quarter of this year, and the GDP in the first half of the year fell by 0.5% year-on-year. Much better than previously expected.
GDP fell 4.9% year-on-year in June, following a 4.3% year-on-year decline in May.
A number of Russian experts said on the 28th that due to the impact of Western sanctions, the Russian economy will continue to decline in the short term.
Western countries' sanctions against Russia have increased Russia's dependence on the primary industry.
Across all industries, traditional export-oriented sectors such as oil production and refining saw a slight year-on-year increase, returning production to January levels, according to the ministry.
In agriculture, production continued to grow in June.
The pharmaceutical and construction sectors performed well, with year-on-year growth of 16.5% and 2.3% respectively, while export-oriented industries and industries with a larger proportion, including chemical, metallurgy, automobile, light industry and furniture production, still experienced severe declines.
The Russian Ministry of Economic Development predicts that in 2022, Russia's GDP will drop by 7.8%, and the inflation rate will be 17.5%.
In a report released by the International Monetary Fund on the 26th, Russia's GDP forecast for 2022 was adjusted to 6%, and 3.5% in 2023.
Compared with the forecast data in April, the organization raised Russia's GDP forecast data for this year by 2.5 percentage points and lowered its GDP forecast data for next year by 1.2 percentage points.
Russian state-owned Development Bank President Mikhail said on the 28th that according to data analysis, Russia's GDP is expected to drop by 5% by the end of 2022, the inflation rate will reach 13%, and the annual benchmark interest rate of the Russian central bank will drop to 7%.
The ruble/dollar exchange rate will reach 69 rubles-70 rubles by the end of the year, and the price of oil will fall to 70 dollars per barrel.
"The decline of the Russian economy is not limited to 2022, it will continue to decline in 2023, which is a major crisis we are currently facing."
Melnikov, head of the Russian Energy Development Center, said the current domestic economic situation is "understandable".
Under Western sanctions, the least affected export-oriented industries will recover first, while the auto industry and metallurgical industries have not yet recovered to their previous levels.
In the medium term, the share of Russian domestic manufacturing will begin to grow due to the need to substitute foreign products that cannot be imported.
However, due to the limited functions, the quality and technical level of the manufacturing industry leaves much to be desired.
For example, Russian-made cars cannot be equipped with airbags, anti-lock braking systems and automatic transmissions.
Goichman, chief analyst of Russia's Tele Trade, said, "The increasing role of raw material exports, the decrease in imports of high-tech equipment and materials, and the reduction in investment in Russia by developed countries have all destroyed the possibility of Russia developing high-tech advanced industries. For now, these factors cannot be fully replaced by other imports or domestic production."
Alexandrov, head of the analysis and research department of Russian investment company IVA Partners, believes that under the current circumstances, it is difficult for the Russian people to improve their living standards.
According to data from the Russian Statistical Office, domestic real wages fell by more than 6% year-on-year in May.
Citizens' income could fall by as much as 7%, based on the first-half results.
"Under cyclical crises, it is not yet possible to expect to improve the living standards of citizens, and the entire world economy is going through a severe crisis." (End)