ANKARA

Russia's economy is expected to contract 8%-10% this year and dip in the final quarter, according to chief of the nation's central bank on Friday.

"The termination of long-term economic relations will have a negative impact on GDP this year ... dropping to the lowest point in the fourth quarter," the Bank of Russia Governor Elvira Nabiullina said after the bank's monetary policy meeting.

"Due to the high base of the first quarter of 2022, the overall change in GDP next year as compared to the entire 2022 will range from zero to minus three percent ... it would be more representative to compare the fourth quarter of 2023 against the lowest point of the decline, that is, the fourth quarter of 2022," she explained.

Nabiullina said the bank forecasts GDP to expand by 4%-5.5% by the end of 2023, as compared to the end of this year.

She said the bank estimates consumer inflation to increase 18%-23% over the year.

Annual inflation for the next 12 months is expected to be much lower as of April 2023, with a baseline forecast ranging from 10% to 12%, she added.

Earlier, Russian central bank lowered its key interest rate by 300 basis points, from 17% to 14%.

Nabiullina said there is room for further rate cuts until the end of 2022, with a forecast range of 12.5–14.7% for this year.