The country’s GDP fell 4% in the third quarter. A consequence, in particular, of the Western sanctions following the military intervention in Ukraine.
Russia has officially entered recession, with a 4% decline in its GDP in the third quarter, after a fall of 4.1% already in the previous quarter, according to a first estimate published on Wednesday by the official Rosstat agency.
Russia is paying the price for heavy Western sanctions imposed after its February 24 attack on Ukraine. However, the regime succeeded in mitigating the shock, compared to forecasts that anticipated a collapse of around 30% of its GDP at the start of the conflict. The Russian Central Bank ultimately expects a contraction of 3.5% over the whole of 2022, in line with IMF forecasts.
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Activity should continue to deteriorate over the next six months. According to Bloomberg forecasts, GDP could fall by 8% in the first quarter of 2023 and the decline will continue until the third quarter of the same year. The IMF predicts a further decline of 2.3% for the whole of 2023.
According to Russian Central Bank Governor Elvira Nabiullina, Russia’s economy is showing “adaptation” to the “new realityof the war with Ukraine. After raising its key rate to 20% in the wake of the first sanctions at the end of February, it has brought it down since mid-September to 7.5% and does not plan to change it by the end of the year. ‘year. “We must look at the situation with sobriety and open eyes, she commented. Things can get worse, we understand that.»
Wholesale and retail trade, as well as freight and manufacturing dragged down activity, while construction and agriculture showed signs of good health. Budgetary support for the economy and the reorientation of exports to countriesfriends» allowed to limit the damage. Morgan Stanley Bank plans toa persistent supply shock and a forced structural transformation towards a less technological economy, which will result in a prolonged recession and reduced potential growth“.
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