According to Russia’s ambassador to Germany, Sergey Nechayev, the Russian economy has remained resilient despite facing sanctions, and German businesses are hesitant to leave the market despite pressure from the German government. In an interview with news website Lenta.ru, Nechayev stated that the German economy is experiencing a technical recession and its economic outlook is bleak. Its GDP declined by 0.3% in the first quarter of 2023, following a 0.5% contraction in the previous quarter of 2022.
On the other hand, Nechayev pointed out that the Russian economy, despite unprecedented Western sanctions, continues to demonstrate stability and growth. The country’s GDP grew by 0.5% in the first five months of this year, and it is projected to achieve a growth rate of over 2% by the end of 2023.
Despite political pressure, German businesses have been reluctant to sever ties with the Russian market. Nechayev emphasized that Russian economic operators see the stability and growth in the Russian economy, which has encouraged them to maintain their presence in the market. He highlighted the fact that Russia continues to advocate for pragmatic, equal, and mutually beneficial partnerships with its foreign partners.
Nechayev issued a warning to companies that have left the Russian market, stating that while something may fill the gap, it would be much more challenging for them to reenter the market than to exit it. Several Western companies, including German insurance giant Allianz and carmaker Volkswagen, have announced their intention to withdraw from the Russian market due to deteriorating business conditions and the impact of Western sanctions in response to Russia’s military operation in Ukraine. However, according to the Kiev School of Economics tracker, only around 10% of foreign firms with subsidiaries in Russia have actually left thus far.
The resilience and growth of the Russian economy have made it an attractive market for foreign companies, despite the political tensions and Western sanctions. Nechayev emphasized that Russia remains open to those who adhere to similar principles of pragmatism and mutually beneficial partnerships. He also noted that if companies decide to leave, there will always be entities ready to fill the gap in the market.
In conclusion, the Russian economy has defied expectations and shown resilience in the face of Western sanctions, attracting foreign companies to continue operating in the market. The German economy, in contrast, is experiencing a technical recession, which has led to a more pessimistic economic outlook. Despite pressure from the German government, German businesses recognize the stability and growth opportunities in the Russian market, leading them to maintain their presence despite the challenges. Russia continues to advocate for equal and mutually beneficial partnerships with its foreign partners, keeping its doors open for those who share similar principles.
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