The Russian economy is proving resilient to the sanctions imposed by Western countries
As per information provided by financial services company Bloomberg, Russia is currently undergoing a noteworthy resurgence following four consecutive quarters of economic contraction. During the second quarter, the country’s Gross Domestic Product (GDP) expanded by 4.9 percent.
The amplification of the industry via fiscal relaxation, along with augmented expenditure on social benefits and wages, appears to have stimulated consumer demand. Predictions suggest that Russia’s economy could exceed its 2021 performance by 2024, as stated by Rosbank economist Evgeny Koshelev. This viewpoint is shared by Natalia Lavrova, the chief economist at BCS Financial Group.
Nevertheless, the ongoing military conflicts have the potential to impede this growth. The expansion of conscription could lead to a shortage of labour, especially following President Putin’s implementation of a law that raises the draft age from 27 to 30.
The weakening ruble, which has experienced substantial losses against the US dollar, remains a significant obstacle. Earnings from Russian oil and gas exports saw a substantial decline in July, dropping from $16.8 billion the previous year to $6.9 billion.
The relaxed limitations on transferring funds abroad might also contribute to capital flight, as numerous Russians seek to move their assets to foreign banks.
The discussion surrounding the decline of the ruble underscores tensions within the Russian establishment. While some individuals, like Kremlin adviser Maxim Oreshkin, attribute the ruble’s depreciation to the central bank’s involvement, the central bank emphasizes the significance of flexible exchange rates. The course of Russia’s economic policies during this uncertain period is yet to be determined.