Izvestia: The European Commission has improved Russia's GDP growth forecast for 2021

The European Commission (EC) published its autumn economic forecast. According to it, Russia's GDP growth forecast for 2021 was improved to 3.9%, while in spring the growth was expected to be at 2.7%. At the same time, the EC expects Russia's GDP to fall to 2.6% in 2022. GDP forecast for the EU and the euro zone has also been improved to 5% in 2021 from 4.3%. The report stresses that Russia's economy has exceeded pre-pandemic levels. "Despite low vaccination rates and high COVID-19 mortality rates in the fall of 2021, real GDP in Russia has already exceeded pre-pandemic levels. Further growth is likely to be supported by a significant improvement in foreign trade conditions and higher tax revenues, which open up opportunities for new subsidies and government spending that will stimulate consumption," noting that higher oil and gas prices are not a direct driver of Russian GDP growth due to a tariff policy that limits price growth in the domestic market. The strengthening of inflation will be a restraining factor, according to the EC. The European Commission predicts the level of inflation in Russia at 6.2% in 2021 and 4.8% - in 2022. The 2021 average annual price forecast for Brent crude oil has been raised to $71.6 a barrel from $68.7 a barrel in May. Prices are expected to rise to $78.9 in 2022 and fall to $72.3 in 2023. On eurozone GDP, the EC improved its growth forecast for 2021 to 5% from 4.8%, but lowered it to 4.3% from 4.5% for 2022. "EU GDP rose nearly 14% in the second quarter of 2021 on an annualized basis, a record growth rate. EU GDP returned to pre-pandemic levels in the third quarter and continued to increase," the survey said. Inflation in the euro area is expected to peak at 2.4% in 2021 and slow to 2.2% in 2022. Also, the European Commission kept its 2021 GDP growth forecast for China at 7.9%, while worsening expectations for 2022 to 5.3% from 5.4%. U.S. GDP for 2021 is expected to grow 5.8% (it was 6.3% in May), and for 2022 it will rise to 4.5% (3.8% was previously projected). Earlier, the Ministry of Economy had forecast 4.2% GDP growth for Russia this year (up from 3.8%).