DISINFO: Russian economy largely outperforms European economies in 2023
SUMMARY
Production growth in Russia is much higher than in Europe. At the same time, inflation is much lower than in many Western countries. It is close to a historically low level of 2.9%. It will not exceed 5% by the end of the year.
RESPONSE
Recurring disinformation narrative spread by Russian officials about the impact of Western sanctions on Russia. The claims about Russia’s economic success contradict factual evidence.
The provisional economic figures are not definitive and it is too early to assess the performance of the Russian economy in 2023. Adding to the difficulty of assessing the true state of the Russian economy is the fact that for about a year the Russian Central Bank and Rosstat - the national statistical agency - stopped publishing a number of key economic data and stopped being as detailed as in the past, e.g. details on banking, production, trade and consumption data.
The war and western sanctions transformed the Russian economy in several ways. Importation and exportation schemes changed because of the international sanctions. Economic stakeholders changed, as many foreign companies left the countries and the share of state-controlled companies now reaches 70%. Part of the skilled manpower emigrated to foreign countries to avoid draft or repression. The brain drain represents hundreds of thousands of skilled professionals. It is estimated that 1.3 million people under the age of 35 left the country in 2022. Additionally, foreign investment collapsed.
In April 2023, Russia's economy ministry revised its 2023 gross domestic product (GDP) forecast to 1.2% growth from a 0.8% contraction, but lowered its forecast for 2024, mirroring a wider trend that anticipates sluggish longer term prospects.
The International Monetary Fund this week also raised its forecast for Russia's 2023 economic growth, but said the country may see a sharply wider budget deficit and a smaller current account surplus this year. It said Russia's global isolation and lower energy revenues could harm its growth potential for years. Some analysts consider that the Russian resilience is nothing but a Potemkin façade, sustained not through genuine economic productivity but rather through shaking down the entire country for pennies to direct towards war.
Read an earlier detailed analysis of the Russian disinformation narratives about EU sanctions.
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