Russia’s Economic Development Ministry forecasts 5-year peak in real wages growth

Russia’s Minister of Economic Development Maxim Reshetnikov predicts that real wages in Russia will increase by 5.4 percent in 2023, which should offset a one-percent drop in real wages in 2022, reports Interfax.

The Russian outlet RBC points out that this forecast amounts to peak real-wage growth since 2018. In September 2022, the ministry had predicted a 2.6-percent increase in real wages in the new year, but has since improved its expectations.

The minister says that low unemployment, employer competition over talent, government pensions and subsidies, and new minimal-wage standards will likely lead to a 10.9 percent increase in nominal wages.

Reshetnikov expects Russia’s GDP to increase by 1.2 percent this year, after a 2.1 percent drop in 2022. This improves the ministry’s earlier forecast, which only looked forward to 0.8 percent growth. The main driver of economic growth, Reshetnikov says, will be the recovering consumer demand encouraged by better wages.

RBC notes that this forecast is more optimistic than most independent expert assessments. The World Bank, for example, predicts a 0.2 percent drop in Russia’s 2023 GDP, compared to the year prior. The Moscow-based Center for Macroeconomic Analysis and Short-Term Forecasting also expects Russia’s GDP either to stagnate or else to drop by up to 0.4 percent.

Russia’s Economic Development Ministry forecasts 5.3 percent inflation in 2023, compared to the 5–7 percent projected by the Central Bank. Other economists who spoke with Interfax said they expected inflation to hover around 6.2 percent.