Russia’s economic resilience :

Despite of facing various economic/trade restrictions due to war against Ukraine  , the Russian economy is doing fairly well.

Factors Contributing to Russia’s Resilience:

• High Energy Prices: Global oil and gas prices surged after the war began, boosting Russia’s export revenue despite some discounts on its oil.
• Pivot to New Markets: Russia has redirected energy exports to countries like China and India, partially offsetting losses from European markets.
• Large Reserves: Russia entered the war with significant foreign currency and gold reserves, providing a buffer against sanctions.
• Government Intervention: The Russian government implemented capital controls and raised interest rates, stabilizing the ruble and preventing financial collapse.
•  corporate investment in Russia has recovered from the drop in 2022, adding an estimated 4.5percentage points to the growth in GDP in 2023. Investment is being bolstered by increased resources flowing to the country’s defence and manufacturing sectors.
• Russia’s private consumption has recovered strongly, adding 2.9 percentage points to GDP growth. This is being driven by buoyant credit and a strong labour market, with record low unemployment of just 3 and a general rise in wages.
•  Central bank ‘s robust monetary policy:

However, there are underlying weaknesses:

• Sanctions’ Long-Term Impact: While the immediate economic shock was less severe than predicted, sanctions are likely to have a long-term dampening effect on investment, technology access, and overall growth.
• Brain Drain: Sanctions and the war have led to an exodus of skilled professionals from Russia, hindering innovation and productivity.
• Limited Consumer Goods: Sanctions have restricted access to imported consumer goods, potentially leading to shortages and inflation down the line.
• Hidden Costs of War: The war itself incurs significant financial costs for Russia, including military spending and reconstruction efforts in Ukraine.

Uncertainties Remain:

• Sustainability of Energy Prices: High energy prices may not be sustainable in the long run, especially as Europe diversifies its energy sources.
• Effectiveness of Sanctions: The full impact of sanctions may take time to become apparent.

Overall, the Russian economy is in a precarious position. While it’s weathering the storm for now, the long-term consequences of sanctions, the war itself, and a changing global economic landscape pose significant challenges.