Western sanctions have affected the russian economy, but it is still showing growth. Find out what is happening to russia's economy and what Western experts say about it

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Two years into the war against Ukraine, Western countries have imposed a record number of sanctions on russia and its economy. However, the russian dictator says that, despite everything, the russian economy is growing, while the situation in the West is supposedly the opposite. Here's what experts and the International Monetary Fund (IMF) have to say about this.

During the election campaign, russian dictator vladimir putin once again complained about the sanctions imposed by Western countries in response to the russian army's invasion of Ukraine. However, he claims that the sanctions "did not affect the russian economy in any way, but on the contrary, they harmed the West".

What is the state of the russian economy?

After the economic downturn of 2022, the russian economy seems to be showing growth, according to the French news agency France24. russia says that the economic growth rate in 2023 is estimated at around 3%. Thus, the IMF has revised its forecast for 2024 upwards to 2.6%, given the strong performance of the russian economy last year. 

Experts say that this growth has exceeded the expectations of even russian analysts, although initially the estimates were much worse.

Why is the russian economy supposedly growing?

According to France24, the recovery of the russian economy is occurring simultaneously with a large-scale increase in government spending, especially military spending. The russian government plans to spend $119 billion on defence in 2024, which is almost 90 per cent more than in 2021. 

In addition to increasing arms production, the war in Ukraine has helped the occupiers boost other industrial sectors. Examples include construction (with the building of large defensive fortifications in eastern Ukraine and western russia) and manufacturing. 

However, russia's biggest revenue stream continues to come from oil and gas production. This allows russia to receive decent funds from exports. At the same time, despite this, russia has experienced a 24% decline in revenue from raw materials due to sanctions.

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Are sanctions against russia ineffective?

The effectiveness of the sanctions was questioned after the IMF updated its data showing the growth of the russian economy, Western media reported. However, putin's statements about the decline of the Western economy are a lie. While, for example, the US recorded GDP growth of 2.5 per cent in 2023, the eurozone's average growth rate was 0.5 per cent.

Experts argue that Western sanctions against russia's banking and financial system, an embargo on electronic components, and price restrictions on russian oil and oil products have indeed had a significant impact on the russian economy.

But IMF chief Kristalina Georgieva believes that the russian economy is still in for a shock.

"In fact, I think the russian economy is going through a very difficult time because of the outflow of people - and because of the restriction of access to technology caused by the sanctions," she said.

The effectiveness of the sanctions includes high inflation in russia, which in January was as high as 7.4% year-on-year. This price increase, especially for some staple consumer goods such as beef and chicken, has led to a sharp increase in demand for eggs in recent months, with prices up 40 per cent year-on-year, forcing the government to take action. 

Also clearly affected in russia is the automotive industry, which is at a standstill as Western sanctions hit exports of electronic components. And russian agriculture is facing an acute labour shortage.

Overall, the russian government talks about economic growth, but the figures show uneven performance, which worsens from region to region.

We remind you! russia held so-called elections that were held without opposition and without any hint of democracy. Why the outcome of these "elections" was obvious in advance, we explained here.

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