The Russian economy is defying Western sanctions at unexpected growth rates

It seems that the war between Russia and Ukraine, and Western sanctions, did not put pressure on the Russian economy at the level that the West expects.

This comes after the latest official data showed that the economy has grown remarkably, amid expectations of continued growth during the current year, despite the decline in the value of the Russian currency against the dollar, the decline in domestic gas production, and the decline in total exports.

Russian domestic product

According to an estimate by Russia's National Statistics Service, Russia's gross domestic product rose 4.9% year-on-year in the second quarter of 2023, compared to 1.8% in the first quarter, Russia's news agency reported on August 7, 2023.

The data showed production growth in passenger turnover 19.8%, wholesale sales volume 12.5%, manufacturing industries 11.3%, construction 9.8%, retail turnover 9%, agriculture 2.9%, and mining of mineral resources 1.1%.

An increase in the number of foreign tourists

Statistics of the Russian Federal Security Service showed that foreign tourist flows to Russia increased by 130% in the first 6 months of 2023 in terms of annual value, reaching more than 187,000 people, according to Russia News Agency.

Chinese tourists topped in terms of visits to Russia during the first six months of the year, followed by visitors from Turkey, Germany, Turkmenistan and Iran. The top ten also includes Kazakhstan, Poland, Kyrgyzstan, India and the United Arab Emirates, along with tourists from Latvia, Lithuania, Finland, Estonia and Poland.

The Russian economy rose to positive values

Russian Prime Minister Mikhail Mishustin said that the Russian economy has risen to positive values in all major economic indicators, stressing the importance of maintaining high growth rates and meeting domestic demand for local goods and services, Russia Today reported on August 11, 2023.

He pointed out that this was achieved thanks to domestic demand, and the national economy's adaptation to the current challenges and it’s showing somewhat stable growth, and this happened thanks to domestic demand, and this is an important matter.

He added that industrial production in the first half of the year grew by 2.5%, and the main contribution was from the manufacturing industries, and the growth of this sector exceeded 6%, continuing: If we take the month of June alone, the growth of the manufacturing industries sector reached 13% on an annual basis.

Optimism about the economy

Assistant to the Russian President, Maxim Oreshkin, drew an optimistic view of the future performance of the Russian economy, saying that the rapid recovery of the Russian economy has ended, and now growth will stabilize in the range of 2% to 2.5% annually, according to what Russia Today reported on August 14, 2023.

He stated that the decline of the ruble complicates the process of restructuring the Russian economy, in the interest of the national economy that the Russian currency be strong, and that the exchange rate of the Russian currency will stabilize in the near future.

The Russian ruble fell to its lowest level in a year and a half

The Russian ruble fell during early trading, on Monday, August 14, 2023, against the US dollar, breaking the level of 100 rubles per dollar for the first time since March 2022.

The ruble fell against the dollar by more than 1.7%, to trade at 100.7 rubles per dollar.

The value of Russian exports

The Russian Central Bank said that the value of Russian exports fell 35% year-on-year in the first quarter of 2023, partly due to price ceilings imposed by Western countries on some Russian oil products.

The central bank said in a report reported by Reuters: The cost of oil exports has declined due to lower prices and because of the embargo and price ceiling imposed by a group of countries on Russian oil and Russian oil products.

Russian gas exports

The volume of Russian liquefied gas exports from Gazprom to Europe amounted to 13.8 billion cubic meters, during the period from January to mid-July 2023, according to Reuters on August 21, 2023.

On the other hand, Novatek exported approximately 12.34 billion cubic meters during the same period; This makes it an imminent competitor, although it is less old than Gazprom.