The economy defied fears of a recession and former predictions that it might contract by extra than 12 p.c.
Russia’s economy contracted by 2.1 p.c final yr, the federal statistics service stated on Monday, shrinking less than expected regardless of its invasion of Ukraine final February and sanctions imposed by European nations and the USA.
Rosstat’s first gross home product (GDP) estimate for 2022 was a marked enchancment on forecasts made quickly after the battle started. In 2021, the economy noticed a 5.6 p.c year-on-year rise.
The economy ministry had at one level predicted a contraction of extra than 12 p.c final yr, exceeding the falls in output seen after the Soviet Union collapsed and through the 1998 monetary disaster.
In April 2022, the World Financial institution predicted a contraction of 11.2 p.c.
“As a consequence of its invasion of Ukraine, Russia faces the biggest coordinated financial sanctions ever imposed on a rustic,” the World Financial institution stated in a press release.
“Russia’s economy might be hit very arduous, with a deep recession looming in 2022. GDP is expected to contract by 11.2 p.c, with little restoration in the following two years,” it added.
Earlier than the battle in Ukraine started, the Russian authorities had expected GDP progress of three p.c in 2022.
Manufacturing industries and wholesale and retail commerce have been among the many sectors that declined in 2022, whereas agriculture, hospitality, building and mining all registered progress.
Public administration and “army safety” gained 4.1 p.c in 2022, the statistics company stated, including to a 3.3 p.c rise in 2021. President Vladimir Putin in January paid tribute to the defence sector for supporting the economy.
Elevated army spending is smoothing out a drop in the nation’s industrial manufacturing, analysts say.
Internet exports elevated to 12.8 p.c from 9.3 p.c, “because of the costs of exported gasoline and power merchandise being considerably above imports”.
Russia’s present account surplus hit a file excessive in 2022, as a fall in imports and strong oil and gasoline exports stored overseas cash flowing in, regardless of Western efforts to isolate the Russian economy over the battle in Ukraine with successive rounds of sanctions.
In January, the excess shrank 58.2 p.c year-on-year to $8bn, squeezing Russia’s capital buffers at a time when Moscow is ramping up funds spending.
The nation’s central financial institution on Monday estimated the 2022 financial contraction at 2.5 p.c.
Forecasts for 2023 are different. The federal government expects a decline of 0.8 p.c, whereas the Worldwide Financial Fund believes the economy might develop by 0.3 p.c as commodity exports have proved resilient.