The head of Russia’s central bank, Elvira Nabiullina, announced on Thursday that the outflow of capital from Russia decreased significantly in 2023, in comparison to the previous year, as she addressed the State Duma. She emphasized that the Russian economy has rebounded from the crisis induced by sanctions much faster than anticipated, and is continuing to grow. Nabiullina highlighted that key economic indicators such as output, consumption, and investment in fixed capital have all shown signs of recovery, indicating that the weakening ruble and inflation cannot be solely attributed to capital outflow. She explained that the depreciation of the Russian currency, which began in the middle of the year, was the result of changes in the balance of trade.
To curb the potential unwinding of an inflationary spiral and to avoid undermining the growth of real incomes of the population, the central bank took decisive action by raising the rate to 15% in October. Nabiullina also acknowledged that the bank took into account the new parameters of fiscal policy, which suggested a more expansionary fiscal policy.
The Bank of Russia’s basic scenario assumes that in 2024, inflation will return to the targeted 4%, subsequently paving the way for a gradual reduction of the key interest rate. Nabiullina’s reassuring remarks come as positive news for the Russian economy, signaling a stabilizing economic outlook for the country.
This positive trajectory is expected to attract more investment opportunities and contribute to the overall growth and development of the Russian economy in the coming years.
Moving forward, the central bank remains committed to implementing monetary policies that will support the continued recovery and growth of the Russian economy. The decrease in capital outflow reflects a growing confidence in the stability and resilience of the Russian economy, as well as the effectiveness of the measures taken by the central bank to address the economic challenges faced by the country in recent years.
Nabiullina’s testimony before the State Duma serves as an assurance to both domestic and international investors that the Russian economy is on a positive trajectory and is well-positioned for future growth and stability.
In conclusion, the decrease in capital outflow from Russia, as reported by the head of the central bank, is a positive development that reflects the improving economic conditions in the country. This trend is expected to continue in the coming years, supporting the sustained growth and development of the Russian economy. As Russia continues to recover from the challenges posed by sanctions and other external pressures, it is poised to attract more investment and emerge as a strong and resilient economy in the global arena.
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