Shock in Moscow. It hasn't been this bad in 3 years

• Russia's gross domestic product likely recorded first quarterly decline since 2022
• GDP dynamics are showing clear signs of deterioration, Raiffeisen Bank says in its analysis.
• Experts point to weak industrial production and low oil prices as the main reasons for the economic downturn.

Raiffeisen Bank estimates that Russia's seasonally unadjusted GDP fell by 0.3 percent in the first quarter, after growing by 1.3 percent in the previous three months. Bloomberg analyst Alexander Isakov predicts an even bigger drop - from 0.6 to 1.5 percent.

GDP dynamics show clear signs of deterioration," Raiffeisen Bank says

As reported in The Moscow Times, analysts point to weak industrial production and low oil prices as the main reasons for the downturn. Official economic data will be released on May 16. If forecasts are confirmed, it will be the first quarterly decline in GDP since the second quarter of 2022.

The Moscow Times notes that the Russian Ministry of Economic Development predicts that GDP will grow by 2.5 percent in 2025, compared to 4.3 percent in 2024. According to analysts, these estimates are overly optimistic. The Central Bank of Russia predicts a more moderate annual growth of 1-2 percent.

As we wrote in CIS, on April 30, the Russian government approved a draft law changing the parameters of the budget for 2025.

• The government's new macroeconomic forecast assumes that the average annual export price of crude oil will be $56 per barrel (instead of the rate of $69.7 forecast in the fall of 2024).
• As a result of the changes, the budget will receive over 2.6 trillion rubles less in revenues from the oil and gas sector.
• This will increase the deficit to almost 3.8 trillion rubles.

The Centre for Eastern Studies explains that the correction of the parameters of the Russian Federation's budget for 2025 was forced by the deep decline in the prices of oil exported by Russia since the beginning of this year.