The Russian economy should this year be less penalized by international sanctions than expected, the IMF said on Tuesday, adding that European countries, on the other hand, are suffering more than expected.
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Russia’s gross domestic product (GDP) is expected to contract by 6% in 2022, the International Monetary Fund anticipates, much less than the 8.5% plunge it expected in its previous forecast published in April.
“It remains a strong recession for Russia in 2022,” qualified the chief economist of the IMF, Pierre-Olivier Gourinchas, during an interview with AFP.
“The Russian economy should have contracted less than expected in the second quarter, exports of crude oil and non-energy products holding up better than expected,” details the institution in its report.
“In addition, domestic demand is also showing some resilience thanks to the containment of the effect of sanctions on the domestic financial sector and a less than expected weakening of the labor market”, adds the Fund.
Since the start of the Russian invasion of Ukraine on February 24, Western countries have imposed a salvo of sanctions on Russia designed to strangle it financially and economically.
But “the Russian Central Bank and Russian policymakers were able to avoid a bank panic or a financial collapse when the sanctions were imposed,” said Pierre-Olivier Gourinchas.
And rising oil prices “provide a huge amount of revenue to the Russian economy, and that has helped support their economy.”
For 2023, the IMF anticipates an additional recession of the Russian economy of 3.5%, 1.2 points less than its previous forecasts.
“The cumulative effect of sanctions increases over time,” Gourinchas stressed.
On the other hand, “the effects of the war on the main European economies have been more negative than expected”, specifies the IMF.
The economic growth forecasts for 2022 have indeed been lowered for Germany (-0.9 point to 1.2%), France (-0.6 point to 2.3%) and Spain (- 0.8 points at 4%).
These stronger consequences are due to “rising energy prices as well as declining consumer confidence and slowing manufacturing activity resulting from continued supply chain disruptions and rising costs. raw materials”, details the IMF.
And a complete cessation of Russian gas exports would “significantly” reduce growth in the euro zone in 2022 and 2023. This would in effect force European countries to implement energy rationing, affecting major industrial sectors.