Challenges in individual sectors of the Russian economy, including oil refining, transport, logistics and agriculture, are receiving increased government attention and control. Russian Deputy Prime Minister Alexander Novak said this while speaking in the Federation Council, the upper house of parliament.

Novak described the slowdown in economic growth after the high rates recorded in 2023 and 2024 as an expected normalization phase. He said the economy was moving toward more moderate dynamics after overheating, which was also creating conditions for lower inflation.

Investment activity in Russia is currently undergoing a correction after rising by almost 40% in 2021–2024. The deputy prime minister forecast a decline in investment this year, a minor increase of 0.2% next year, and growth of 2.5% and 3% in 2028 and 2029. He stressed that investment remains a factor in long-term economic growth.

The economy continues to be supported by household incomes and consumer demand. Gross domestic product increased by 0.8% in August and by 0.6% year-on-year during the first eight months of the year. The updated forecast puts the GDP level at approximately the same level by the end of the year. Unemployment remains historically low at 2.2%.

Novak said efficiency requirements for new projects had become stricter because the current stage was starting from a high base. The main task is to restore sustainable growth rates and further improve citizens’ well-being. To achieve this, the government plans to expand domestic production, improve resource efficiency and create conditions for new investment.

Immediate difficulties include problems in oil refining, transport and logistics, and agriculture. The government has taken a broad range of measures to ensure sufficient fuel supplies on the domestic market. They include a temporary ban on gasoline and diesel exports, organized fuel imports, changes to exchange-trading rules to restrain wholesale prices, and fiscal incentives for additional production and fuel imports.

Gasoline imports are a temporary measure because national production normally exceeds domestic demand by 10–15%. The diesel market is now balanced. Russia has fully covered the fuel needs of its northern regions and supplied the requirements of agricultural producers for autumn field work.

Russia may partially authorize diesel exports if production exceeds demand. Novak said the export ban had recently been renewed for October, but the situation would be monitored. The country cannot accumulate excessive fuel stocks because this would reduce refining volumes and the output of other products in demand. Domestic diesel production is 80% higher than consumption, but storage capacity limits the amount of surplus that can be held. Gasoline exports may resume once the domestic market stabilizes.

Authorities are considering proposals to support refineries that cannot meet modernization deadlines agreed with the Energy Ministry and the Federal Antimonopoly Service for objective reasons. Postponing upgrade deadlines is also under consideration.

Novak said government agencies and oil companies had carried out extensive work to protect refineries, already leading to a significant reduction in damage. Passive protection adapted to threat models had been established, while active protection using air-defense assets had been strengthened. Oil companies have also managed to restore refinery operations more quickly after attacks. Four refineries were attacked overnight, and only one was still assessing damage.

Inflation in Russia stood at 4.93% year-to-date and 6.26% year-on-year at the end of September. It is forecast to reach 6.8% by the end of the year. Economic growth is expected to total 1.4% this year and gradually reach 2.4% in 2029. Non-oil and gas exports are expected to rise from $220 billion to $260 billion.

Novak said global markets were experiencing a diesel fuel shortage. Prices in Europe and the United States are reaching record levels, which he linked to sanctions restrictions, attacks on refining infrastructure and the closure of logistics and transport routes. OPEC+ countries continue to assess the maximum production capabilities of the states participating in the agreement.

Source: tass.com