BERLIN, June 20 (Reuters) - Russia's economy will contract again in 2023 though not as severely as last year, due to favourable energy prices and higher state spending, according to Scope Ratings forecasts seen by Reuters on Tuesday.
Russian GDP is expected to decline by 0.8% this year, less than the 4.0% forecast previously by Scope Ratings. The economy contracted 2.1% last year, Russia's federal statistics service said in February.
The Scope figure is more pessimistic than the International Monetary Fund's latest forecast for 0.7% growth and Russian government projections for growth of 1.2%. President Vladimir Putin said last week Russia's economy could grow by up to 2% this year.
In 2024, Russian GDP will post a moderate 0.9% rebound, reflecting the greater-than-expected resilience of the economy in face of the repercussions from the war in Ukraine, Scope said in its report.
Scope analysts said hefty state spending was making a significant contribution to supporting near-term growth, resulting in widening budget deficits.
Furthermore, budget deficits will increase further as lower global energy prices reduce oil and gas export receipts in the context of the G7’s oil price cap and the European Union’s diversification away from Russian natural gas.
Scope forecasts a budget deficit of 3.8% of GDP in 2023, compared with the present official forecast by Russia of a 2% deficit, before narrowing to 2.8% the following year.
Persistent inflation remains a drag on Russia’s growth. Inflation is expected to average around 6% in 2023, according to Scope's estimates.
"Underlying price pressures are exacerbated by labour shortages, resulting from the mobilisation of working-age men for the war in Ukraine and accelerated emigration which reached a high of around 1.3m people in 2022," Scope's report said.
The militarisation of the economy also makes it harder to address pre-existing structural challenges exacerbated by the war, including weak investment, low productivity growth and adverse demographic trends, which according to Scope, limits the Russian economy’s growth potential.
Scope Ratings has been in talks with the European Central Bank to become one of its recognised agencies, joining Standard and Poor's, Moody's, Fitch and DBRS.
(Reporting by Rene Wagner and Maria Martinez; Editing by Alison Williams)