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The Ministry of Economic Development announced the forecast for inflation until 2024

The Ministry of Economic Development lowered the forecast for inflation in the Russian Federation for 2020 to 3% from 3.8%, keeping the forecast for 2021-2024 at 4%, the Minister for Economic Development of the Russian Federation Maxim Oreshkin told reporters, presenting an updated forecast for the Ministry for 2020-2024 and Updated forecast for 2019. “Inflation in H1 2020 will fall below 3%, and by the end of the year it will be 3%”, he said.

Mr Oreshkin noted that in the forecast for inflation of 3% in 2020, the Central Bank softens the DCT. The minister added that next year there will be some change in the structure of newly issued loans from consumer loans in favour of mortgage and corporate loans.

“Consumer lending has little to do with the basic rate of the Central Bank, it is more related to the willingness of banks to issue such loans and, of course, the availability of demand. The fact that we see a high proportion of current income that people who have taken these debts have to send to pay them off, this is a factor that will increase with each quarter and, in fact, seriously reduce the ability, on the one hand, people to take this kind of loans, on the other hand, the willingness of banks that will overestimate this whole situation, issue such loans”, - he explained in an interview to television channel “Russia 24”.

“The growth rate (consumer lending), which now is about 25% per year, is significant, several times higher than the growth rate of nominal incomes of the population, therefore it is unstable, it cannot be kept constant. There is only one question - when will such a fast growth rate end? The central bank is now responding to the situation in this market: it tightens regulation; the next tightening measures are introduced from October 1. This factor, superimposed on the general situation, can lead to the fact that the growth rate here has seriously slowed down. “We expect growth of about 4% in the consumer loan portfolio next year”, the minister added. According to him, such a slowdown in consumer lending will contribute to a large weakness in consumer demand (according to the forecast of the Ministry of Economic Development, retail turnover in 2020 will grow by 0.6%) and reduce inflationary dynamics.

“If inflation decreases, the Central Bank, as he himself said, will lower the level of interest rates, and since consumer lending will not react seriously to the level of base rates, the main effect will be realized in mortgage and corporate lending”, said Mr Oreshkin.

 

Source: www.ria.ru  

News
The OECD predicts acceleration in the global economy and a slowdown in the domestic Russian economy. The decline in household incomes and the contraction of consumer demand may become an additional brake on the recovery of the Russian economy.
According to Rosstat, the economic downturn in Russia in 2020 amounted to 3.1% – significantly better than expected.
The Deputy Chairman of the Bank of Russia Alexey Zabotkin emphasized that the potential economic growth rates do not depend on monetary policy, they are influenced by demography, labor force, and the efficiency of institutions.
The Russian economy continues to lose its attractiveness in the eyes of large transnational businesses as consumers become poorer and the government continues the sanctions war with the West.

The Washington Institute of International Finance (IIF) sharply improved its forecast for the Russian economy. Its experts revised estimates of the fall in GDP in 2020 from minus 4.8% to 3.6%.

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