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MOSCOW (Reuters) -Russia’s budget deficit is projected to be 1.5% of gross domestic product (GDP) in 2025, three times the government’s target, as the country prepares for a prolonged period of low global oil prices, a Reuters poll of economists showed on Wednesday.
Oil and gas revenue is a crucial source of cash for the Kremlin, accounting for about a third to a half of total federal budget proceeds over the past decade.
The slowdown of the global economy as the result of trade wars is hitting demand for oil and pushing down the price, which fell by more than 11% in April.
Russia has cut its forecast for the average price of Brent crude in 2025 by nearly 17% from an estimate last September.
The country has also reduced its forecast for 2025-2027 oil and gas export revenues due to weaker oil prices, expecting proceeds to fall by 15% this year.
The planned 2025 deficit of 0.5% of GDP was calculated based on an oil price of around $70 per barrel. Finance Ministry officials have publicly admitted that with oil at around $60 the deficit will widen by about 1% of GDP.
The poll found that GDP growth is expected to slow sharply to 1.6% this year, according to the median forecast of 13 economists, compared with 4.3% in 2024. In last month’s Reuters poll, economists predicted 1.7% growth for 2025.
Full-year inflation is expected to be slightly higher at 7.0% in 2025, compared to 6.8% in last month’s poll. High inflation forced the central bank to keep the key interest rate on hold at 21% this month.
Economists see the central bank cutting the key rate in the third quarter as inflation comes down and growth slows.
The rouble, which has rallied by about 38% against the U.S. dollar so far this year, mainly on expectations for a peace settlement in Ukraine, is projected to weaken to 95 to the dollar in 12 months from its current level of 82.70.
This new estimate is stronger than the previous poll’s prediction of 100 roubles to the dollar in a year’s time. The current strong rouble is adding to the pressure on the budget as it implies less revenues from energy exports when converted into the domestic currency.