According to new forecasts, Russia’s economy will return to growth next fiscal year, despite international sanctions for the invasion of Ukraine.
According to the European Bank for Reconstruction and Development (EBRD), Russia’s economy will grow 1% in 2024, despite a 3 per cent decline in GDP in 2018.
An international development bank, the EBRD, believes that the Russian economy will contract by 3.5 per cent in 2022. This is 1.5 per cent more than its previous forecasts in the autumn.
These projections are evidence that Russia’s economy is not being destroyed by the sweeping international sanctions, which forced western multinationals out of Russia and cut off Russia from global markets last February.
According to the International Monetary Fund, Russia’s economy is expected to grow by 0.3% this year. This makes Russia a more successful country than the UK.
According to the EBRD, high oil prices in 2022 boosted the country’s economy as Moscow increased production to more than 500,000 tonnes to meet rising international demand.
Beata Javorcik is the chief economist at EBRD. She stated that the western sanctions were not intended to cause an immediate economic crisis in Russia but that they would restrict private investment and prevent access to technology that could hinder productivity over the next few years.
Although sanctions are effective, it is unrealistic for Russia to expect large-scale effects in the near future. Sanctions prevent Russia from accessing western technology, foreign direct investments and the loss of multinational companies. Javorcik stated that sanctions would have a negative impact on productivity growth, and it will continue to do so over time.”
She said that Moscow had spent years “sanction-proofing the economy” in the lead-up to the invasion.
The EBRD, however, expects Ukraine’s war-ravaged economy to contract by 30% this year. This is similar to the sharp contraction in 2022.