Russian economy headed for ‘soft landing’ – The Economist

Moscow has defied all apocalyptic forecasts, the paper has admitted

Russia’s economy continues to successfully battle through all the hardships, all while growing stronger, the Economist reported in its latest piece published on Sunday.

Moscow has repeatedly “defied the doomsayers,” the British weekly said, adding that its economic performance appears to be going back to the pre-conflict levels despite numerous rounds of unprecedented sanctions imposed by Washington and its allies over the two years of conflict with Kiev.

In particular, Russia managed to rein in the inflation that was a cause for concern late last year, the paper noted.

“Data to be published on March 13th are expected to show that prices rose by 0.6% month-on-month in February, down from 1.1% at the end of last year. On a year-on-year basis inflation is probably no longer rising, having hit 7.5% in November,” the Economist said.

The outlet credited the success to the timely actions of the Russian finance ministry and the central bank. The ministry’s exchange-rate controls supported the ruble and reduced the price of imports while the bank’s decision to double interest rates led to the inflation slowing down.

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Now Russia appears to be heading for a “soft landing,” the weekly said, with inflation slowing down without inflicting serious damage to the economy. Russia’s GDP meanwhile grew by more than 3% last year while the unemployment rates remained “at a record low.” Business closures were at their lowest in eight years as well, according to the report.

Such economic performance has put Russia back on its pre-conflict economic development track, the Economist said, noting the nation’s “resilience.” Russian businesses also found effective ways to overcome the restrictions imposed by the West, by establishing “durable supply chains with ‘friendly’ countries,” to the point where Russia now gets more than a half of its imports from China.

With the trading relationships secured, Russia’s exporters are ditching the discounts on their goods, originally introduced after the Western sanctions push.

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“The discount on oil Russia offers to Chinese customers, for instance, has fallen from more than 10% in early 2022 to about 5% today,” the Economist reported, adding that the new policies were bringing in more revenues and profits for the Russian companies. 

“The Russian economy appears to be proving the pessimists wrong,” the weekly said, adding that it is “once again back on track.” 

The US and the EU economies “are at the bottom, while we are rising,” Russian President Vladimir Putin said last month.

The International Monetary Fund (IMF) has also expressed surprise that the Russian economy was growing faster than many experts predicted, and revised its growth forecasts for 2024 to 2.6%, up from the previous expectation of just 1.1%.