- According to Russia’s federal statistics service, the country’s GDP contracted by 2.1% in 2022.
- This is better than the 8.8% to 12.4% contraction that was projected in April 2022.
- However, Russia stopped publishing some key economic data last year, throwing up a red flag.
One year after Russia’s invasion of Ukraine, Russia’s economy appears to have fared better than an expected “meltdown” — but experts have raised a red flag about the data itself.
A day before Russian President Vladimir Putin gave his state of the nation address on Tuesday, Rosstat, the federal state statistics service, said the country’s GDP shrank by 2.1%. While this contraction reversed a 5.6% GDP growth in 2021, it did far better than an 8.8% to 12.4% contraction that Russia’s economy ministry projected in April 2022.
In his state of the nation speech, Putin went on to tout the resilience of Russia’s economy amid the sanctions — even though “an economic meltdown was projected” earlier last year in the aftermath of the invasion of Ukraine, state-run TASS news agency reported.
However, Russia’s official statistics have come under scrutiny because it stopped publishing certain key economic statistics — like import-export data — citing a need to curb errors and “speculation” about its trade, per a Reuters report on April 22.
The Russian central bank feels this makes research and forecasting challenging, according a Financial Times January 29 report.”The lack of publicly available statistics affects the quality of analysts’ and researchers’ work,” the bank said, per the FT.
The Russian central bank, helmed by governor Elvira Nabiullina, has been pushing for the declassification of economic data, citing the need for data openness to help with research, per the FT, which cited three sources familiar with the matter. The Kremlin has not approved the request, the FT reported.
Despite scrutiny, analysts acknowledge Russia’s economy has been resilient in 2022
Despite questions over Russia’s official statistics release, many analysts acknowledge that Russia’s economy has been resilient against Western sanctions in the past year — in part, because the war caused a surge in energy prices.
Russia is a major energy exporter. The war in Ukraine triggered heightened concerns over issues related to energy security, particularly about natural gas exports — which Europe was reliant on.
The EU’s ban on Russian oil imports from December sent countries rushing to load up before the embargo kicked in, which helped prop up Russia’s energy coffers. Russia, too, started redirecting energy exports to non-sanctioning countries like India and China. Putin’s administration even intervened in the currency market, putting in place programs to preserve jobs, experts told Insider in June last year.
It should also be noted that Russia has been sanction-proofing itself since 2014 when it was also hit with a raft of trade restrictions after it illegally annexed Crimea from Ukraine, giving the country some space to adjust to the increasingly intense trade restrictions from the international community in 2022.
But that may change in 2023
But Russia’s economic resilience may not last another year as the European Union closes in on its 10th sanctions package against the country, to pressure the Kremlin to end its war in Ukraine.
This latest package of sanctions include export bans for goods to Russia, including items such as antennas and cranes meant for the construction sector that could be redirected to Russia’s military.
“Russia has become an economic afterthought and a deflated world power,” wrote Jeffrey Sonnenfeld, a professor at the Yale’s management school, and Steven Tian, the director of research at the Yale Chief Executive Leadership Institute, in a commentary earlier this week.
“Tightening these screws will help improve the chances that before this time next year, Russia will realize it does not need Putin, just as the world has already realized it does not need Russia,” they added in the commentary which was first published in Fortune.