T.Recently Russians don’t have much to brag about, so they get whatever they can get. Social media trolls are posting videos of gas stoves left wide open for viewers in Europe. In Berlin it may cost a few hundred euros, but in Moscow it costs a few rubles. The ridicule is childish, but it hints at a deeper truth: The economic war between Russia and the West is at a delicate time. While Europe wobbles, brink of recessionRussia is emerging from one.
Western sanctionsThe military operation launched in response to President Vladimir Putin’s invasion of Ukraine has hurt Russia’s long-term prospects. Forecasts suggest that blocking the world’s ninth largest economy from accessing foreign technology and expertise has cut its growth potential in half. Output of oil and gas, the lifeblood of Russia’s economy, is about 3% below pre-invasion levels and could drop further once the European embargo comes into effect at the beginning of the year. Between 250,000 and 500,000 Russians fled the country in the first six months of the war, according to Liam Peach of consultancy Capital Economics. Many were highly educated and highly paid.
Putin’s recent decisions partial mobilization Inflicted further economic damage. It caused a small bank run as people again worried about the future of the country. By our estimate, Russia withdrew her $14 billion worth of ruble deposits in September. That’s about a third of her February. Another 300,000 Russians probably fled. A further decline in the labor force is exacerbating labor shortages and exacerbating inflation. Headline inflation has fallen sharply from its peak, but price pressures in the labor-intensive services sector have worsened.
Despite these problems, the recession is probably over.many doubt the formula gdp Data, but you can get a sense of activity from a variety of sources. Goldman Sachs, a bank, produces a “current activity indicator”. Data show that Russia is more active than other European powers (see chart). Expenditure indicators produced by another bank, Sberbank, wobbled following the mobilization order, but have edged up since. Auto industry output, which was virtually nil months ago, is also recovering, suggesting producers are getting supplies from outside the West. In dollar terms, Russia’s monthly goods imports are almost certainly above last year’s average.
A recent prediction is that imf Improved outlook for Russia in 2022. gdp 8.5% less. We now expect a 3.4% decline. This isn’t a big deal, but it’s manageable. In fact, data suggests Russia can sustain its military spending. In September, the government released her 2023-25 budget proposal. According to Elina Rybakova of the International Finance Association, a trade body, this means a significant increase in war-related spending over the next few years, especially on domestic “security.”have avoid an economic collapsePutin expects to double at home and abroad. ■
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https://www.economist.com/finance-and-economics/2022/10/11/as-europe-falls-into-recession-russia-climbs-out As Europe plunges into recession, Russia rises