Russia doing better than expected despite sanctions over war in Ukraine, IMF says
- International Monetary Fund upgraded Russia’s GDP estimate, though expects its economy to contract
- New Yale study says Russia facing ‘economic oblivion’ as Western sanctions continue to eat away at GDP
Despite damaging Western sanctions imposed on Moscow in the wake of the invasion of Ukraine, Russia’s economy appears to be weathering the storm better than expected as it benefits from high energy prices, the IMF said.
The sanctions were meant to sever Russia from the global financial system and choke off funds available to Moscow to finance the war.
But the International Monetary Fund’s latest World Economic Outlook on Tuesday upgraded Russia’s GDP estimate for this year by a remarkable 2.5 percentage points, although its economy is still expected to contract by six per cent.
“That’s still a fairly sizeable recession in Russia in 2022,” IMF chief economist Pierre-Olivier Gourinchas said.
A key reason that the downturn was not as bad as expected was that “the Russian central bank and the Russian policymakers have been able to stave off a banking panic or financial meltdown when the sanctions were first imposed,” he said.
Meanwhile, rising energy prices are “providing an enormous amount of revenues to the Russian economy”.