Russian economy doing well despite sanctions: IMF
Despite damaging Western sanctions imposed on Moscow following the invasion of Ukraine, the Russian economy appears to be weathering the storm better than expected as it benefits from high energy prices, the IMF said on Tuesday.
The sanctions were intended to cut Russia off from the global financial system and choke off funds available to Moscow to finance the war.
But the International Monetary Fund’s latest World Economic Outlook raised Russia’s GDP estimate for this year by a remarkable 2.5 percentage points, even though its economy is still expected to contract by 6%.
As major economies including the United States and China slow, “the Russian economy is estimated to have contracted in the second quarter less than expected, with exports of crude oil and non-energy products holding better than expected,” the report said.
After starting the year below $80 a barrel, oil prices climbed to nearly $129 in March, before falling back to just over $105 as natural gas prices rise again and are approaching their recent peak.
Meanwhile, despite the sanctions, “Russia’s domestic demand is also showing some resilience thanks to containing the effect of the sanctions”.
By contrast, Europe faces the brunt of the fallout given its dependence on Russia for energy, and the situation could worsen significantly if Moscow halts gas exports and once the European Union would impose a ban on Russian oil delivered by sea from next year.
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