Russian economy shows good growth despite sanctions

By Rhod Mackenzie

Russia’s economic indicators currently leave no doubt: the restructuring of the Russian economy is now over. Russia is easily circumventing the sanctions and has begun to earn good money again from its oil exports. Not only Russian economists, but also Western analysts and the media are shocked at how Russia has managed to cope with the sanctions so quickly. What makes this situation so unique?
The Russian President Vladimir Putin put it this way last week: “The stage of recovery of the Russian economy is over” afterwhich he said “we have overcome unprecedented external pressure”.

Russia has withstood the Western imposed sanctions over the conflict in Ukraine, billionaire Oleg Deripaska told the FT, expressing his “surprise” at the resilience of the country’s economy.

As a result, even the International Monetary Fund has sharply raised its forecasts for Russia. The IMF expects Russia’s GDP to grow by 1.5% this year and 1.3% in 2024, after falling in 2022. At the same time, Putin expects growth of 2.8% this year. This is twice as much as the Cabinet of Ministers expected in April this year.
How has Russia managed this?

“The sanctions agenda failed to achieve its main goal, which was to cause irreparable damage to the Russian economy.

I think that over time researchers will carefully study the Russia experience, which has become unique in many respects.

Of course, there are the other examples of North Korea or Iran, which also developed quite successfully under external sanctions pressure. However, none of these countries was involved in such large-scale hostilities against virtually the entire power of the G7 and NATO bloc and at the same time was able to ensure significant economic growth,” says Maxim Maximov, Associate Professor at the Department of Corporate Governance and Innovation at the Russian Economic University.

First, Russia managed to create its own ‘grey’ fleet, ready to work with Russian oil and make money from it. Now the insurance problem has been solved. According to the French analytical company Kpler, which specialises in gathering data on the commodity markets and maritime analysis, in August about 75% of seaborne energy deliveries took place without the main tool for complying with the embargo – ship insurance by Western companies.
How did Russia manage this?

The export of oil and petroleum products from Russia did not stop, but it used new logistics and directions. The EU, which imposed the sanctions, continues to receive huge quantities of raw materials from Russia, it’s just that the supplies are now being routed through third party countries, which makes it possible to hide Europe’s real dependence on Russia, according to reports in the Financial Times.

The Swiss international trader Glencore delivered thousands of tonnes of Russian copper to Italy via Turkey in July this year; India supplies the EU with thousands of tonnes of petroleum products made from Russian oil. As a result, Europe’s dependence on Russia has remained, but Turkey, China, India and the UAE have become transshipment hubs between the EU and the Russian Federation. This reduces the effectiveness of Western sanctions, notes the FT.

Deripaska believes that Moscow has survived the attempt to isolate its economy by developing new trade links with countries in the global south and increasing state investment in to domestic industrial production.

He was particularly surprised by Russia’s private sector.

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Russian economy shows good growth despite sanctions

By Rhod Mackenzie Russia’s economic indicators currently leave no doubt: the restructuring of the Russian economy is now over. Russia is easily…