The International Monetary Fund expects growth to slow to 1.8% next year and has warned that Russia's potential growth rate has fallen to around 1.25% from 1.7% before the war.
The economy of the Russian Federation is growing despite Western sanctions
The Russian government has raised its economic growth forecast for 2024. Moscow's new GDP forecast of 2.8% aligns with the latest IMF forecast of 3.2%.
Bloomberg writes that a strong labour market and rapid wage growth are helping to stimulate consumer spending. At the same time, according to the IMF, "there are some signs of overheating" since unemployment is at a record low.
Expert Oleksandr Isakov explained that the sanctions against Russian energy resources are not as strict as those against Venezuela and Iran because the West is trying to curb the rise in oil prices.
In addition, some restrictions were introduced in 2014 after the invasion of Crimea, and Russia has already amortized these costs. At the same time, he pointed out that some large multinational corporations have not left the Russian market.
The expert also noted that Russian households remain confident thanks to the tight labour market. Currently, the unemployment rate is 2.8%.
In addition, Isakov noted that voluntary conscription into the army with monetary incentives made it possible to preserve the peace of the population.
Will the Russian economy continue to grow?
The limited labour market is a side effect of war-related budget spending, partially financed by energy exports. Moscow needs oil prices to remain at the current $90 per barrel to keep the budget balanced.
The IMF expects growth to slow to 1.8% next year and has warned that Russia's potential growth rate has fallen to around 1.25% from 1.7% before the war.
This will mean that, in the medium to long term, per capita income in Russia can no longer approach Western European levels.
Sanctions against Russia
The West continues to bombard Russia's economy with sanctions, trying to punish aggression against Ukraine. For a long time, the official Kremlin openly ridiculed Western economic restrictions.
On March 23, Bloomberg reported that Indian oil refining companies will no longer accept tankers belonging to the state-owned PJSC Sovcomflot due to the risk of sanctions.
On April 18, Bloomberg reported that Moscow wanted to bypass Western sanctions by building two new routes to Asia through Iran and the Arctic coast.
At the same time, the Russian Sberbank has to pay 752 billion rubles in the form of dividends. Last year, the bank posted its highest ever profit, demonstrating the resilience of the Russian economy despite Western sanctions.
