Sanctions have gravely damaged parts of Russia’s industrial base, such as the car sector, which relies on foreign parts. But other sectors have not done too badly
year has been bruising for Russia’s economy. Foreign investors fled en masse, many never to return. Official forecasts suggest that few countries will see theirshrink by more this year. Only a handful of countries, including war-torn Ukraine, will end up posting worse numbers.
to Vladivostok. After Western countries imposed an unprecedented number of sanctions, the stockmarket collapsed along with the rouble. At the time it seemed Vladimir Putin’s “Fortress Russia” was crumbling.growth in 2022 dropped from 2.5% to a contraction of 10%. Some economists were even gloomier: the White House looked for a year-on-year decline in RussianRussia faced a squeeze on both the supply and demand sides of the economy.
Two main reasons explain why Russia’s downturn has proved shallower than expected: policy and trade. In the early days of the invasion the quick actions of the central bank and regulators convinced ordinary Russians that they were serious about tackling surging inflation. Inflation expectations, having jumped, came back down again.
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