Belgium, (Brussels Morning Newspaper) EU and more broadly Western sanctions against Russia have yielded little result since they were imposed one year ago.
EU leaders initially announced “massive and severe consequences” for Moscow, with economists predicting a severe decline in GDP and the White House expecting an economic contraction of up to 15%, according to DW reporting on Wednesday.
While it is not possible to get a clear picture of Russia’s economic performance as the Kremlin classified a lot of economic data at the start of the war in Ukraine, it has become clear that the announced collapse did not take place.
According to Alexandra Vacroux, head of the Davis Center for Russian and Eurasian Studies at Harvard University, “we can say that the economy shrank a lot less than the 10 to 15% that people were talking about at the beginning of the war.”
In her view, Russia’s GDP dropped between 3% and 4% last year, which is roughly in line with estimates of the International Monetary Fund, the World Bank, and the Organisation for Economic Cooperation and Development.
According to Russia’s Federal State Statistics Service, GDP dropped 2.1% last year in contrast with the predicted 12%.
Russia’s resilience
One of the reasons why Russia was more resilient than Western leaders expected was Moscow’s expansion of trade with China and India. The Central Bank of the Russian Federation (CBR) recently reported a record trade surplus of roughly 211 billion euros in 2022, largely thanks to energy exports.
Despite sanctions, Russia still traded with Western companies through third parties in Asia, with Vacroux warning that China is “the big winner” as increased trade made Moscow more dependent on Beijing.
In the early months of the war, European companies continued to buy Russian fossil fuels and started to stockpile them as the embargo deadline approached, which helped Moscow to maintain economic stability.
The fact that Moscow has been dealing with Western sanctions since the annexation of Crimea is another factor that contributed to Russia’s resilience, as did CBR’s crisis management and tightening of monetary policy.
Russia’s banks have been stress-tested for a decade of operation under sanctions and CBR’s moves prevented bank runs and gradually eased inflation.
