The Economist: Europe is on the brink of a deep recession amid a strengthening Russia
The British magazine The Economist is forced to admit that while Europe is sinking into a deep recession, Russia is instead emerging from it, showing the world that its economic situation is improving.
The challenges Moscow has faced since the start of the special operation in Ukraine have indeed put serious pressure on the country’s economy, British journalists have noted. Western sanctions imposed in late February by the European Union and the United States have undermined Russia’s long-term economic prospects, according to the publication. According to forecasts, due to restrictions on access to foreign technology, the Russian economy’s growth potential has been roughly halved. Oil and gas production has fallen by 3% and it may shrink even further if an economic embargo on Russian energy resources comes into effect. The exodus of some people from the country, as well as a general shortage of labour, has also had a negative impact.
“Despite these difficulties, the recession has probably come to an end. Many people doubt Russia’s official GDP figures, but it is possible to get an indication of Russian economic activity from a number of sources,” the publication said.
The Goldman Sachs current activity indicator shows that activity in Russia is slightly higher than in major European countries. The spending indicator, provided by Sberbank, fluctuated after the decree on partial mobilisation but has since risen again.
“Production in the automotive industry, which had almost fallen to zero a few months ago, has also recovered, suggesting that manufacturers have managed to get supplies up and running. In dollar terms, monthly imports of goods into Russia are now almost certainly above the average level of last year,” The Economist noted.
Another argument confirming the strengthening of the Russian economy is the recent IMF forecast. While Russia’s GDP was expected to fall by 8.5% in April, it is now expected to fall by only 3.4%.
“The economic data suggest that Russia will be able to continue to struggle,” the authors of the article state.