from Treasury's assessment Russian economic prospects.
After the invasion of Ukraine and the imposition of sanctions and other economic measures by the United States and its partners, the Russian economy shrank by 2.1% in 2022 (Figure 1).[ii] Energy exports hit a record high, cushioning what would have been a deeper contraction. The Russian economy is more than 5% smaller than pre-upgrade forecasts and lags far behind other energy exporters, including the United States. The war and related multilateral sanctions put the Russian economy under considerable economic pressure, leading to rapid increases in spending, a depreciation of the ruble, rising inflation, and tight labor markets (reflecting the loss of workers).
Source: IMF and Treasury staff calculations. Russia's pre-upgrade trajectory is the IMF's fourth forecast for 2021; the war economic trajectory is the IMF's October 2023 World Economic Outlook. The comparison countries are oil exporters: Brazil, Canada, United States, Saudi Arabia, Mexico, Iraq, United Arab Emirates, Norway and Kuwait.
This chart is based on a comparison of the International Monetary Fund's pre-war forecasts with the October 2023 World Economic Outlook wartime forecasts. While not all differences can be attributed to the impact of Russia's expanded invasion of Ukraine, the event is a major macroeconomic development since February 2022.
It is important to remember that GDP – the sum of all civilian and military final expenditures – did not fall significantly in 2022 and rose in 2023 only due to the military component.Bank of Finland's Heli Simola documents this in a just-released report work documents on this topic. Key image:
source: Simola (2023).
look My assessment of Russia’s pre-military GDP like. The Ministry of Finance noted that household consumption will fall by approximately 2% in 2022.
Furthermore, the fiscal position becomes more precarious as Russia's sovereign wealth fund is depleted and oil revenues decline relative to 2022 (see BOFIT September Post). also, Inflation is rising (You can also look at economist).
