Russian economy shrinks by four per cent due to impacts of Western sanctions
The Russian is now four per cent smaller than it was a year ago, according to new figures from the country’s state statistics agency.
Russia’s gross domestic product (GDP) for Q2 2022 equals a sum equivalent to 96 per cent the value of the country’s economy in Q2 2021, the preliminary Rosstat statistics show.
The Rosstat figures show retail turnovers are down 9.8 per cent and manufacturing turnovers are down 3.3 per cent.
The contraction comes after Western powers hit Russia with a raft of far-reaching sanctions aimed at damaging the Federation’s economy.
The sanctions have seen embargoes placed on Russian energy products and bans on the import of exports of certain goods.
The West also took efforts to cut Russia out of the global financial system by blocking it from payments system Swift.
The efforts to cut Russia out of the global financial system forced the country to default on its sovereign debt for the first time since the Bolshevik Revolution, earlier this year.
The sanctions, paired with public and political pressure in Europe, Britain, and America, led to more than 1,000 multinational companies exiting Russia.
The Russian economy has however been buoyed up by surging commodity prices that have caused the Russian Ruble to hit its strongest point in seven years.
In seeking to avoid the detrimental impacts of sanctions, Russia has increasingly been forced to pivot away from Europe in selling oil and gas to China and India.
High energy prices meant Russia’s economy contracted at a lesser rate than predicted by analysts, who forecast a seven per cent reduction in the Federation’s economy, following 3.5 per cent growth in Q1.