Russian economy to contract by 3% this year, says central bank head

The head of Russia's Central Bank said that the country's economy will contract by about 3 per cent this year, a sharp turnaround from its growth in 2021

The head of Russia's Central Bank said on Friday that the country's economy will contract by about 3 per cent this year, a sharp turnaround from its growth in 2021, the year before sanctions and company pullouts in the wake of the conflict in Ukraine.

Central Bank governor Elvira Nabiullina said following a bank board meeting that inflationary pressure remains elevated, citing worsening trade conditions as one factor. She said annualised inflation as of December was 12.7 per cent.

Russia's gross domestic product rose by about 4.8 per cent last year.

A wide array of foreign companies pulled out of Russia or scaled down their activities in the country after Russia sent troops into Ukraine in late February.

The European Union imposed a price cap this month on Russian oil, one of the country's key exports.

Nabiullina said the effect of the price cap would be analyzed more thoroughly at the bank's February meeting.