The Russian economy contracted sharply in the second quarter as the economic fallout of the war in Ukraine took hold.
Russia’s statistics office said on Friday that the economy contracted by 4% from April to June compared to a year ago. A complete picture of how the economy has changed since February’s invasion of Ukraine, the quarterly Gross Domestic Product (GDP) report shows that Western sanctions have cut Russia off from much of the world’s financial system, leaving many to trade with Moscow. This is the first quarterly report to break ties. It was also a sharp reversal from the first quarter when the economy rose his 3.5%.
The Russian economy has proven more resilient, even as imports to Russia have dried up and financial transactions have been blocked to the extent that they were forced to default on their foreign debt. than some economists had originally expected. But analysts expect the economic losses to be even greater as Western countries increasingly turn away from Russia’s oil and gas, an important source of export revenue.
“We expected a big drop this year and then more after that,” said Laura Solanko, a senior adviser at the Bank of Finland’s Institute for Transition Economics. Instead, we’ve seen a milder recession that will continue into next year, with the economy slipping into a shallower recession for two years, she said.
