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Economic Outline

Economic Indicators

On February 24th 2022, Russia initiated a military conflict on the Ukrainian territory, which profoundly upsets the current political context in both countries and will have substantial political and economic ramifications. For the ongoing updates on the developments of Russia-Ukraine conflict please consult the dedicated pages on BBC News.

The latest specific information on economic sanctions against Russia in response to the conflict in Ukraine is available below:
•    What sanctions are being imposed on Russia
•    The list of global sanctions on Russia for the war in Ukraine

For the latest updates on the key economic responses from governments to address the economic impact of the COVID-19 pandemic, please consult the IMF's policy tracking platform Policy Responses to COVID-19.

After several years of negative growth due to massive capital flight, the collapse of the rouble, falling oil prices and trade sanctions imposed by the West after the Ukrainian crisis, the Russian economy had returned to modest growth since 2017, driven mainly by mineral resource extraction and private consumption. However, due to the COVID-19 pandemic, the economy contracted to -3% GDP in 2020, as exports, investment activity and consumer demand all plunge. According to the IMF’s estimates, GDP growth rebounded strongly in 2021 (+4,7%), supported by dynamic exports and domestic consumption. Growth was expected to slow down to 2.9% in 2022 and 2% in 2023, with the waning of recovery momentum in private spending and investment activity (IMF ; Focus Economics). However, the invasion of Ukraine by Russian military on February 24th 2022 prompted exceptionally harsh Western sanctions, including the freezing of central bank assets, aimed at pushing the Russian economy into a deep and lasting recession. Due to this economic war, the economy is now forecast to contract by -7.5% in 2022 according to Coface. High inflation will also negatively impact private consumption, which is the traditional growth driver (Coface).

The Russian economy entered the COVID-19 crisis with a sound fiscal framework and substantial policy space thanks to prudent and well-tuned macroeconomic and monetary policies (IMF). The general government balance and debt deteriorated in 2020 due to the strong public health and economic package (equivalent to 3.5% GDP) adopted in response to the crisis, the sharp drop in oil prices and lockdowns, but indicators improved in 2021 with the recovery. The recovery was mainly supported by non-commodity sectors, retail trade and higher consumer spending (Euler Hermes). The public deficit recovered from a deficit of -4.4% GDP in 2020 to -0.6% GDP in 2021 (IMF). Public finances were expected to reach balance starting 2022, with a surplus of 0.1% GDP in 2022 and 0.2% GDP in 2023 (IMF), supported by higher oil prices. However, due to the war in Ukraine and the Western sanctions hurting Russia’s financial and energy sectors, public deficit is now expected to widen to -6.5% GDP, according to Coface. Similarly, the public debt level was expected to decrease slowly, from 19.3% GDP in 2020 to 17.9% GDP in 2021 and 2022 and 17.7% GDP in 2023 (IMF). However, Coface now forecasts public debt to increase to 26% GDP in 2022. Compared to other emerging markets, this is a relatively low ratio. In addition, Russia benefits from substantial savings in the National Wealth Fund. According to IMF estimates, inflation increased from 3.4% in 2020 to 5.9% in 2021, and was expected to decrease to 4.8% in 2022 and 4.5% in 2023. However, Western sanctions put considerable downward pressure on the Russian rouble, which was down close to 30% against the dollar a week after the invasion. As a result, inflation is now projected to reach 23% in 2022 (Coface). The Russian central bank raised its key interest rate to 20% and could increase it even further (Coface). Rating agencies Fitch and Moody's downgraded Russia's sovereign debt to ‘junk’ status. Western sanctions are expected to spark a banking crisis leading Russian major banks to bankruptcy. Before the start of the war, the government’s key priorities were to manage the fluctuating COVID-19 pandemic evolution, as well as to achieve budgetary balance and stability. In addition, the government was pursuing the de-dollarization of the economy (Euler Hermes). Russia was already facing many challenges: a large state footprint, weak governance and institutions, insufficient infrastructure, low levels of competitiveness, underinvestment, low production capacity, dependence on raw materials, poor economic climate, lack of structural reforms and ageing of the population.
The unemployment rate was falling before the COVID-19 crisis, but real wages had also fallen. Social inequalities remain high, especially between large cities and rural areas. Only 1% of the population owns around 70% of private assets. Despite the emergence of an urban middle class, the poverty rate remains at around 13%. A middle class protest movement calls for an end to corruption and patronage. According to IMF estimates, the unemployment rate increased to 5.8% in 2020 under the effect of the pandemic, but decreased to 4.9% in 2021 and was forecast to decrease to 4.6% in 2022 and 2023. The war in Ukraine will darken the outlook, with high inflation reducing the purchasing power. 

Main Indicators 201920202021 (e)2022 (e)2023 (e)
GDP (billions USD) 1,690.051,478.57e1,647.571,703.531,753.94
GDP (Constant Prices, Annual % Change) 2.0-3.0e4.52.82.1
GDP per Capita (USD) 11,517e10,115e11,27311,66512,024
General Government Balance (in % of GDP) 2.0-4.4e-
General Government Gross Debt (in % of GDP) 13.819.3e17.917.917.7
Inflation Rate (%) 4.53.4e5.94.84.5
Unemployment Rate (% of the Labour Force) 4.65.8e4.94.64.6
Current Account (billions USD) 65.4036.11e94.6275.1167.74
Current Account (in % of GDP) 3.92.4e5.74.43.9

Source: IMF – World Economic Outlook Database, 2016

Note: (e) Estimated Data

Monetary Indicators 20162017201820192020
Russian Rouble (RUB) - Average Annual Exchange Rate For 1 GHS 16.8113.4113.6712.4412.89

Source: World Bank, 2015


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Latest Update: June 2022