Russia entered the third quarter in technical recession after falling its GDP by 4.4% between July and Septemberamid unprecedented sanctions for its military campaign in Ukraine, according to preliminary data released today by the Ministry of Economic Development.
Between April and June, the Russian economy had contracted by 4.1%, chaining two consecutive quarters of contraction.
Russia has to face unprecedented economic sanctionsa total of 12,739 if the restrictions imposed by the international community before and after the country’s military intervention in Ukraine on February 24 are added, according to the Castellum.AI portal, which collects updated information on punishment measures.
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The Russian government claims that the economy has adapted apace to the new circumstances, despite economic data indicating otherwise.
Russia would close 2022 with strong economic contractions
The Ministry of Economy calculates that Russia will end the year with a contraction of 2.9%which the following year will only be 0.8%.
The Central Bank of Russia (BCR), in turn, revised its macroeconomic forecasts on October 28 and predicted a recession of between 3.5% and 3% this year, somewhat shallower than the range of 6% to 4% still forecast in July.
The monetary entity believes that in 2023 Russia will continue in recession with a contraction of between 1% and 4%although he expects the economy to grow again in the second half of next year.
In this way, it anticipates that in 2024-2025 the GDP will increase between 1.5% and 2.5% year-on-year.
The organization led by Elvira Nabiúllina pointed out in its analysis that high-frequency indicators point to a more solid dynamic of commercial activity in the third quarter than expected.
The BCR said that a growing number of companies are adapting to operate under external commercial and financial restrictions due to the Russian military campaign in Ukraine.
This is facilitated by a gradual diversification of suppliers of finished products, raw materials and components, as well as import substitution processes and incursions into new markets, including a refocus on domestic consumers, he explained.
However, surveys show that a significant proportion of companies “still face difficulties in production and logistics”.
This Thursday, the President of Russia, Vladimir Putin, will hold a meeting with members of the Government to analyze the tools to support investment in the Russian economy.
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