The consequences of Western sanctions are particularly violent for Russia’s Gross Domestic Product. The country’s economy is expected to contract between 7.8% and 8.8% in 2022, the Russian Ministry of Economic Development estimated on Wednesday.
Under a baseline scenario, which sees oil prices falling by the end of the year to $73-74 a barrel, GDP is expected to fall by 7.8 percent, the ministry said in its macroeconomic forecast. If the sanctions, imposed since the launch of Moscow’s offensive in Ukraine, were to harden, and oil prices were to experience a more significant drop, the economy would then contract by 8.8%, estimates the ministry.
Difficulties “in terms of production and logistics”
On April 29, the Russian Central Bank underlined that the external environment was “difficult for the Russian economy” and weighed “heavily on economic activity”, observing that companies were “facing considerable difficulties in terms of production and logistics”.
In this context, the monetary institution had estimated that the country’s GDP should fall by 8 to 10% this year, then should start to “grow rapidly again in 2023 thanks to a structural transformation” of the economy.