Russia’s economy shrank only by 2.1% in 2022, according to the federal statistics service Rosstat. This figure defied initial predictions that the country’s economy would contract by over 12% and marked a significant improvement from the 5.6% year-on-year rise seen in 2021. Despite the economic sanctions imposed by the US and European nations and the impact of its invasion of Ukraine, Russia’s economy managed to fare better than expected.<\/p>\n\n\n\n
The Russian government had initially forecasted GDP growth of 3% in 2022, but this prediction was revised downwards after the conflict in Ukraine began. <\/p>\n\n\n\n
The World Bank predicted an 11.2% contraction in April 2022, citing the economic sanctions as the main reason for the downturn. The bank’s statement read, <\/p>\n\n\n\n
\n“Due to its invasion of Ukraine, Russia faces the largest coordinated economic sanctions ever imposed on a country. Russia’s economy will be hit very hard, with a deep recession looming in 2022. GDP is expected to contract by 11.2 percent, with little recovery in the ensuing two years.”<\/p>\n<\/blockquote>\n\n\n\n
Continuous inflow<\/h2>\n\n\n\n
The current account surplus hit a record high in 2022, driven by a fall in imports and robust oil and gas exports. Net exports increased to 12.8% from 9.3% due to the prices of exported fuel and energy products being significantly above imports. <\/p>\n\n\n\n
Despite Western efforts to isolate the Russian economy over the conflict in Ukraine with successive rounds of sanctions, foreign money continued to flow into the country.<\/p>\n\n\n\n
Manufacturing industries and wholesale and retail trade were among the sectors that declined in 2022, while agriculture, hospitality, construction, and mining all registered growth. Military security and public administration also gained 4.1% in 2022. President Vladimir Putin praised the defence sector for supporting the economy in January 2023.<\/p>\n\n\n\n
Increased military spending helped to smooth out a drop in the country’s industrial production, according to analysts. The country’s central bank estimated the 2022 economic contraction at 2.5%.<\/p>\n\n\n\n
Economic resilience<\/h2>\n\n\n\n
Forecasts for 2023 vary, with the government predicting a decline of 0.8%, while the International Monetary Fund (IMF) believes the economy could grow by 0.3% due to resilient commodity exports. The IMF also noted that the economy’s recovery is contingent on the resolution of the ongoing conflict in Ukraine.<\/p>\n\n\n\n