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In 2022, Russia held an economic show

T.he is past This year was a blow for the Russian economy. Foreign investors fled en masse, and many never returned.Official projections are that most countries will gdp This year it will be even smaller. Only a handful of countries, including war-torn Ukraine, end up recording worse numbers.

But if you look at it another way, Russia has done surprisingly well. In the days following the invasion of Ukraine in February, Moscow to Vladivostok. The stock market collapsed along with the ruble after the West imposed an unprecedented number of sanctions. At that time, Vladimir Putin’s “Fortress Russia” seemed to be crumbling.

Economists quickly lowered their forecasts.Annual consensus estimates within days gdp Growth slowed from 2.5% to a contraction of 10% in 2022.Some economists were even more pessimistic: White House expected Russian to fall year-on-year gdp 15%. Inflation soared nationwide.

Russia faced pressure on both the supply and demand sides of the economy. Western companies withdrew in dozens, limiting what Russians could buy. Meanwhile, the central bank doubled interest rates, raising debt service costs and further squeezing demand.

But within weeks, it became clear that the worst predictions would not come true. sanctions It has severely damaged parts of Russia’s industrial base, such as the automotive sector, which relies on foreign parts. Others, especially those mandated by the country to assist in the war effort, are not doing so badly. Economists revised up their growth forecasts for the summer and fall. Now they expect the Russian economy to contract by about 3-4% this year. The unemployment rate has barely fallen. One reason is that companies are being told to keep workers, even if their salaries are reduced or unpaid.

Policy and trade are the two main reasons why the Russian recession turned out to be shallower than expected. Early in the invasion, the swift actions of central banks and regulators convinced ordinary Russians that soaring inflation was taken seriously. Rising inflation expectations fell again. Rising interest rates prevented a financial crisis by encouraging citizens to return the money they withdrew from their bank accounts early in the COVID-19 pandemic.

The sanctions were harsh, but for most of 2022 there were few restrictions on hydrocarbon sales (now changed). So far this year, Russia’s current account surplus has surpassed her $220 billion, double his previous year’s.

This foreign currency helps finance imports. Many Western companies have stopped selling goods and services to Russia. But companies in other parts of the world are happy to help. For example, Chinese companies are stepping up their support.Turkey is intermediary For Western companies trying to evade sanctions. Russian imports have come a long way to recover after plummeting in the spring.

“Real-time” economic data paints a worrying picture for the West. Currently, the Russian economy is doing better than expected. Meanwhile, Europe, under pressure from very high energy costs, is in recession.

https://www.economist.com/finance-and-economics/2022/12/29/in-2022-russia-kept-the-economic-show-on-the-road In 2022, Russia held an economic show

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