Russia's GDP declined in the first quarter.

The Russian Federal Statistics Service (Rosstat) announced on May 17 that the country's GDP fell by 1.9% in the first quarter compared to the same period last year.

The decline this quarter was mainly due to a drop in retail and wholesale sales. Conversely, the manufacturing, agriculture, and construction sectors recorded record growth, Rosstat said. In the first quarter of 2022, the economy grew by 3%.

Inflation in March fell to just 3.5% and continued to decline to 2.3% in April. The unemployment rate is currently low at 3.5%, but this is mainly due to a shrinking workforce.

Previously, the Russian Ministry of Economy estimated that the country's GDP fell by 2.2% in the first quarter. The Central Bank of Russia, however, forecast this figure at 2.3%. In the last quarter of last year, Rosstat reported that Russia's GDP lost 2.7%.

Last year, the Russian economy did not collapse as predicted, but GDP still fell by 2%. Western sanctions imposed on Russia following the conflict in Ukraine have caused significant damage to the country.

The International Monetary Fund (IMF) is one of the organizations forecasting Russia's growth this year. However, they also warn that isolation and declining energy revenues could affect Russia's economic growth for the next few years.

The International Energy Agency (IEA) said in March that although Russia's crude oil exports are currently at their highest level since the start of the conflict, oil revenues have fallen 43% compared to the same period last year. This directly impacts Russia's budget, with a deficit of 3.4 trillion rubles ($42.3 billion) in the first four months of the year.

However, the Russian Finance Ministry stated that this deficit is partly due to increased spending, particularly military spending. Experts predict that Russia's budget deficit could reach 3-4% of GDP this year, higher than the target of 2%.

Ha Thu (according to Reuters, The Moscow Times)

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