April 19, 2024

Russia has announced that the Russian economy has been restored after the sanctions, and the country is now transitioning to the stage of its development.

Source: Russian President Vladimir Putin at a meeting with the government, as reported by a Russian media outlet Meduza

Quote: “We have withstood an absolutely unprecedented outside pressure, sanctions pressure… Russia’s GDP has returned to the 2021 level, and now it is important to facilitate the conditions for further stable and long-term development,” Putin claimed.

He supposed that the GDP increase may reach 2.5%-2.8% by the end of 2023, even though only a 1.2% increase was predicted in the spring.

Putin remarked that the situation with the federal budget has also stabilised: “in total there is so far a small deficit but in August it was once again fulfilled with a surplus.”

Yet Putin did admit some problems, specifically “inflation acceleration”. But he expressed certainty that this problem will be solved by professional and well-coordinated decisions.

Background: A month ago Putin claimed that Russia had “entered the top five largest economies in the world” and “outpaced Germany in purchasing power parity”.

This statement was made amid rolling blackouts which started in Russia, absence of fuel at the gas stations and historically high fuel prices.

Oil and gas revenue has also plummeted to a record-breaking point in Russia. Fossil fuel export in Russia has been decreasing since the moment the sanctions were imposed, both in quantitative and qualitative aspects, and in June 2023 Russia’s income from this type of economic activity reached the lowest monthly index.

In January-June 12 billion cubic metres of gas were exported from Russia to Europe. Gas exports to the EU reached up to 170-180 billion cubic metres a year in the best years of Gazprom.

According to the results of the first half of 2023, the gas business of Gazprom became unprofitable for the first time since the pandemic and for the second time in the last 25 years.

Herewith a two-stage increase of internal prices was announced in Russia in July, and it surpassed even the forecasts. The prices for Russian consumers of Gazprom will change in two stages – from 1 July 2024 by 8% and by 8% more from 1 July 2025.

On 15 September the Bank of Russia adopted a decision to increase its key rate for the third time in three months. The Central Bank admitted that in order to deter the inflation and bring it back to targeted indexes an additional strengthening of monetary conditions is needed. Herewith it was stressed that a “durable process of sustaining harsh monetary conditions in the economy” is expected.

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