Russia: Updating macroeconomic forecasts

Given new inputs, we have revised our forecasts: we reduce the depth of the expected recession this year from -6.8% to -6.3%, inflation by year end from 22% YoY to 17%, and the average annual exchange rate from USD/RUB 84 to 78.6. Against this backdrop, the CBR is set to cut the key rate more actively: from 12-14% by end 2022, envisioned in our April estimate, to the currently expected 9%. The latest information on the package of budget measures aimed at supporting the economy likely indicates a narrowing of the budget deficit in 2022 from RUB 0.5-1.0 trln, envisioned in our April estimate, to RUB 0.0-0.5 trln.