Russia’s Gross Domestic Product (GDP) has experienced a turnaround in the second quarter of the year, according to a report released by the country’s statistics service, Rosstat, on Friday. This positive growth comes despite the ongoing pressures imposed by Western sanctions on the Russian economy.
Rosstat’s calculations indicate that the economy expanded by 4.9% in annual terms during this period. The last time Russia witnessed such a high growth rate was in the fourth quarter of 2021, when it surged to 5.8%. This quarter’s positive GDP growth represents the first time since the first quarter of 2022 that the indicator has shown a growth trajectory. During the last year, the Russian economy faced four consecutive quarters of decline as it adjusted to the new economic realities brought about by the country’s military operation in Ukraine and subsequent Western sanctions.
“The Russian economy not only compensated for the decline in the second quarter of last year (-4.5%), but also demonstrated growth to the level of two years ago,” said the Ministry of Economic Development’s press service in response to the data.
The sectors that experienced the highest growth rates in the second quarter were passenger turnover (up 19.8%), wholesale turnover (12.5%), manufacturing (11.3%), construction (9.8%), and mining (1.1%). Additionally, stable labor market conditions, along with the associated growth in real incomes, had a positive impact on the recovery of consumer demand. The overall turnover of retail trade, services, and public catering surged by 8.3% in the second quarter, surpassing the level of two years ago.
Alexander Shirov, the head of the Institute of Economic Forecasting of the Russian Academy of Sciences (IEF RAS), attributed the economy’s revival to the high level of investment activity by private businesses.
“At the moment, we are witnessing an active and consistent recovery of growth, and by the end of the year, the economy may well overcome the recession of 2022,” stated Shirov in an interview with news outlet RBK.
Preliminary forecasts from the Ministry of Economic Development suggest that Russia’s economy is projected to grow by more than 2% this year, aligning with the Bank of Russia’s latest projections. In July, the central bank predicted that GDP would expand by up to 2.5% by the end of 2023.
It should be noted that these positive growth figures are a promising sign for Russia’s economic recovery, considering the challenges posed by continued Western sanctions. The country’s ability to rebound and demonstrate growth reflects the resilience of its economy and the adaptability of businesses and industries within Russia. As Russia moves forward, it aims to maintain economic stability and foster sustainable growth in the face of ongoing geopolitical uncertainties.