In the second quarter, gross domestic product (GDP) fell by 4 percent compared to the same period last year. It was the first full quarter since Russia invaded neighboring Ukraine in February. Since then, the Russian economy has been hit hard by the many Western sanctions.
The punitive measures and choice of many Western companies to turn their backs on the country have already reduced imports and exports of goods in Russia, while inflation rose to its highest level in decades. Russian households also buy less and have started to save more in uncertain times.
Still, the contraction is not as bad as previously expected, the Russian central bank reported. However, the prognosis is that the malaise will worsen in the coming quarters. The lowest point of the crisis would then be reached sometime in the first half of next year. After that, the Russian economy should be sufficiently adapted to the new situation that growth can resume.
But at the central bank they are also taking into account a so-called risk scenario in which global economic conditions deteriorate further and Russian exports come under further pressure due to additional sanctions. If that happens, the slump could be deeper next year than it was during the global financial crisis in 2009 and growth would not return until 2025.