Despite crippling economic sanctions imposed on Russia by the West following the invasion of Ukraine, the International Monetary Fund (IMF) has stated that Russia’s economy appears to be performing better than anticipated as a result of high energy prices.
The goal of the economic sanctions was to isolate Russia from the international banking system and stifle Moscow’s ability to raise money for the war.
However, despite still expecting its economy to decline by 6%, Russia’s GDP forecast for 2022 was impressively raised by 2.5 percentage points in the IMF’s most recent World Economic Outlook.
Russia’s economy is anticipated to have contracted during the second quarter by less than originally projected, with crude oil and non-energy exports holding up better than expected, the report stated. Major economies, such as the United States and China, are slowing down.
Oil prices rose from below $80 a barrel at the beginning of the year to almost $129 a barrel in March before falling back to little over $105, while natural gas prices are rising once more and getting close to their recent peaks.
Russia’s domestic demand is also showing some resilience thanks to containment of the effect of the sanctions, despite the embargo.
As a result of its reliance on Russian energy, Europe is bearing the brunt of the consequences, and things might get much worse if Moscow stops exporting gas and the European Union bans Russian oil carried by sea as of next year.
