Russia's military aggression against Ukraine set the Russian economy back four years and set in motion one of the longest GDP declines in modern Russian history. Analysts polled by Bloomberg believe that in the second quarter, Russian GDP fell by 4.7% in annual terms. The agency claims that Rosstat will publish approximately the same data on Friday.
“The economy will lose four years of growth, returning to its 2018 size in the second quarter. We expect contraction to slow in the fourth quarter due to looser monetary policy supporting demand. However, in 2023 the economy will lose another 2% as the European energy ban will reduce exports,” economist Alexander Isakov told the agency.
The agency notes that initial forecasts of a sharp decline in the economy of more than 10% of GDP in 2022 are not justified. Nevertheless, this does not make the economy less of a problem: some industries, such as auto production, are paralyzed, consumer spending is not growing, citizens have switched to austerity. Against this background, it is not necessary to wait for the recovery growth of the economy, and the crisis itself will drag on, the agency notes.
“The crisis is moving along a very smooth trajectory. The economy will reach its lowest point at best by mid-2023,” Evgeny Suvorov, chief economist for Russia at CentroCredit Bank, predicts.
Macroeconomic stability is one of the main narratives that the Russian authorities are promoting in an attempt to reduce the “effectiveness of anti-Russian sanctions.” Russian President Vladimir Putin has repeatedly argued that Western countries themselves suffer more from restrictions, but neither the United States nor the EU countries have seen such GDP dynamics. Meanwhile, in Russia, sanctions have led to large-scale crises in entire industries, and the Russian budget may be reduced to a significant deficit by the end of the year.