19.07.22 Review

The decline dynamic in the Russian economy is fairly modest due to the economy’s relatively Low engagement in the global value chains, analysts of the Central Bank of Russia believe

The decline in inflation in May and June is caused by temporary factors, but inflation risks due to the reduced supply in the economy remain high, write the experts of the Central Bank in their new bulletin "What Do the Trends Say". Like other think tanks, the Central Bank points to the signs of stabilization in the economy: the decline in economic activity has stopped, albeit highly uneven sectoral dynamics remains. That allows for an adjustment of the end of year expected economic decline estimate.

Such a trajectory was facilitated by the relatively low engagement of Russian manufacturing in the international value-added chains and, consequently, a lower dependence on intermediate imports both at the macro level and in most industries (in those industries, where the import dependence is high, the drop was more significant).

However in investment imports the dependance of the Russian economy is high, which will have a negative effect on the economic potential in the long run.