The Russian economy is expected to grow by 3.2% in 2024, outpacing growth rates predicted for major advanced economies like the US. Despite the ongoing conflict in Ukraine, high levels of investment and strong private consumption have propelled the Russian economy forward. This positive forecast has surprised many in Western countries who had hoped that the imposition of sanctions on Russia would seriously threaten its economy and put pressure on President Putin’s government.
The International Monetary Fund (IMF) predicts that this momentum will slow in 2025, with Russia’s growth rate falling to 1.8%. However, even with this slowdown, Russia’s energy sector remains resilient, with steady exports of oil and commodities to major markets such as India and China. By avoiding the oil price ceiling set by the G-7 countries, Russia could continue to export energy at a high level.
One of the factors contributing to Russia’s resilience against Western sanctions is its strong partnership with China. In 2023, trade between the two countries reached a record $240 billion, boosted by Chinese demand for basic Russian goods that have been discounted by the West’s reluctance to engage in trade with Russia. The government in Moscow has also seized funds from fleeing foreign companies due to the conflict in Ukraine, with reports showing they took $387 million in mid-March.
In summary, despite the ongoing conflict in Ukraine and international sanctions imposed on Russia, the country’s economy continues to grow at a strong pace thanks to high levels of investment and private consumption. While there are concerns about a potential slowdown in growth rates in 2025, Russia’s energy sector remains resilient and its partnership with China is a significant factor contributing to its economic stability.