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11 Mar, 2024 22:43

Russian economy headed for ‘soft landing’ – The Economist

Moscow has defied apocalyptic forecasts, the magazine has reported
Russian economy headed for ‘soft landing’ – The Economist

Russia’s economy has continued to overcome hardships while growing stronger, The Economist wrote in an editorial on Sunday.

Moscow has repeatedly “defied the doomsayers,” the British weekly said, adding that its economic performance appears to be returning to pre-conflict levels despite unprecedented sanctions imposed by the US and its allies over the hostilities between Russia and Ukraine.

Russia has managed to rein in inflation, which 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,” it reported. 

The outlet credited the success to the timely actions of the 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 inflation slowing down.

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

Russia’s economic performance has brought it back to its pre-conflict economic development track, the British weekly reported, 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 receives more than half of its imports from China.

With trade relations secured, Russian exporters are ditching the discounts on their goods that were originally introduced after the Western sanctions push.

“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 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 EU economies “are at the bottom, while we are rising,” Russian President Vladimir Putin stated last month.

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