Statistics Services Report 1.9% Contraction in Russian Economy in Q1 | Mighty 790 KFGO

According to data from the Rosstat Federal Statistical Office, the Russian economy contracted by 1.9% year-on-year in Q1 2023 after showing growth of 3% previously. This was contrary to early predictions of a double-digit collapse in 2022, despite Western countries imposing sanctions following Russia’s deployment of troops to Ukraine in February. In Q1 2023, the economy shrank by 2.1%, with the economy ministry estimating an initial GDP fall of 2.2% and the central bank forecasting a decline of 2.3%. The decline was driven by lower retail and wholesale merchandise sales, with Rosstat data showing growth in manufacturing, agriculture, construction, and other sectors.

The International Monetary Fund (IMF) is among those predicting growth in 2023, but warns that Russia’s economic growth prospects over the next few years will be dampened by global isolation and declining energy revenues. However, military production and massive state spending are mitigating the impact of sanctions, with Moscow planning to continue what it calls “special military operations” in Ukraine.

Overall, the data suggests a mixed outlook for the Russian economy, with some sectors showing growth while others decline, and significant challenges posed by sanctions and declining energy revenues.

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