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    How Russia’s Economy Has Defied Predictions Following the Ukraine Invasion


    In February 2022, Russia's invasion of Ukraine had reverberations around the globe.[0] The Russian invasion of Ukraine not only caused destruction but also had an impact on global energy markets.[0] Despite early predictions, the Russian economy has not collapsed as a result of the Western trading freeze.[1] Russia's Central Bank's interventions in a timely manner, the revenues from energy exports that still remain, and the shift towards new markets have served to cushion the impact.[1]

    The World Bank, International Monetary Fund and OECD anticipate that, in a most favorable situation, Russia's GDP will fall by 2.2% in 2022 and up to 3.9%, with a further decrease likely in 2023. The Institute for International Finance (IIF) predicted a 15% fall in Russian GDP in 2022 while JP Morgan envisaged a 12% contraction. Privately, technocrats in Russia cautioned Putin that there could be a potential 30% decrease.[2]

    There are a couple of reasons for this being true[3] Importing to the coasts is typically more cost-effective than domestic production. Oil can vary in form when extracted from the earth; it can be sweet or sour, and it can be heavy or light.[3] It may be more economical to import goods from overseas rather than relying on domestic production. U.S. oil prices are inevitably affected by the state of the global oil market.[3]

    The IMF estimates that the Russian economy contracted by 2.2 percent in 2022; for 2023, a growth rate of 0.3 percent is forecast, while for 2024, the IMF now forecasts growth of 2.1 percent. The IMF has revised its forecasts significantly higher than before.[4] Despite this, Russia is now forecast by the International Monetary Fund to grow faster in 2023 and 2024 than the UK.[5]

    A larger portion of the Russian economy is being allocated to its defense industry.[4] The federal government's spending on military activities rose to a minimum of 5 percent of the country's gross domestic product (GDP), totaling approximately $90[4] The transparency of the budget in Russia has been reduced, meaning that the actual expenditure could be greater than what is reported.[4] The Kremlin has mandated that regional and local authorities utilize their resources to provide draftees with necessary military supplies.[4] In spite of record high oil and gas revenues in 2022, Russia's budgetary situation has gone from a 1 percent surplus to a 2 percent deficit.[4]

    Vyugin, a seasoned Russian banker and economist, described the sanctions as “less a knockout blow than a light jab.[6][6]

    0. “The impact of Russia's war in Ukraine on energy markets” Newswise, 14 Feb. 2023,

    1. “Western sanctions didn’t stop the war. Were they worth it?” POLITICO Europe, 20 Feb. 2023,

    2. “The sanctions war against Russia: a year of playing cat and mouse” The Guardian, 21 Feb. 2023,

    3. “Ask the Expert: The Russia-Ukraine war's impact on energy markets” IU Newsroom, 20 Feb. 2023,

    4. “Russia's War Economy and the Impact of Sanctions on Military Production” IP Quarterly, 15 Feb. 2023,

    5. “Russia’s economy is expected to outpace the economy of every G7 country next year. Why the West’s sanctions have been almost useless” Toronto Star, 11 Feb. 2023,

    6. “Putin’s War to Lop $190 Billion Off Russia's Economy in Delayed Reckoning” Yahoo Canada Finance, 17 Feb. 2023,

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