Russia Faces Economic Slowdown Amidst Labor Shortages and Sanctions

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Russia's economic expansion is set to decelerate in the latter half of 2023, cautioned Elvira Nabiullina, the central bank governor, on Friday. This slowdown is attributed to labor shortages, sanctions, and diminished export revenues plaguing Moscow.

Despite enduring persistent high inflation and a weaker ruble, Russian authorities have largely downplayed the economic repercussions of Moscow's protracted engagement in Ukraine.

Nabiullina addressed the press after the central bank's third consecutive key rate hike in two months, stating, "We anticipate more restrained growth rates in the latter part of this year. This comes as a natural consequence of a period marked by swift recovery. The pace of economic expansion is constrained primarily by the scarcity of resources, particularly labor."

While maintaining the growth projection at 1.5-2.5 percent for 2023, she disclosed a downward adjustment for 2024, now ranging between 0.5-1.5 percent at most.

The central bank's announcement on Friday revealed a one-percentage-point increase in the key rate, now standing at 13 percent, citing factors such as a depreciating ruble and inflation persistently exceeding the bank's four-percent target.

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