After 10 months of sanctions…Russia entered the top 10 world economies

Despite the countless packages of sanctions that the West has launched against Russia and the forecasts of failure of its economy in the short term by the European and American institutions, according to data from the International Monetary Fund, in 2022 Moscow entered the ranking of the top 10 world economies, placing itself in ninth place and overtaking Italy – which is in tenth place – Brazil and South Korea for gross domestic product (GDP). The same trend will continue in 2023, when Russia is expected to maintain its current position in the rankings. In 2022, Moscow recorded a GDP of 2,133.1 billion dollars, also thanks to the strengthening of the value of the ruble and the increase in the prices of raw materials, including energy, of which Russia is a major producer. Against the resistance of the Muscovite economy, there is – on the contrary – one recession trend of many of the major Western economies: is today, for example, the news reported by Financial Times according to which the United Kingdom will face the worst and longest recession of the G7 economies, but also according to which the ECB’s decision to raise interest rates will put many European states in difficulty, including Italy, considered the weak link of the euro area.

The results of the Russian economy and above all the appreciation of the ruble contradict the dominant narrative that for months has been carried forward by the European institutions regarding the effectiveness of the sanctions: the president of the European Commission, Ursula von der Leyen, in April 2022 , in an interview with the German newspaper Bild, had stated that «the sanctions enter deeper into the Russian economy every week: exports to Russia have collapsed by 70%, 700 Russian aircraft have lost their license due to lack of spare parts and software updates. Hundreds of big companies and thousands of experts are turning their backs on the country. According to current forecasts, gross domestic product in Russia will collapse by 11%. Russia’s national bankruptcy is only a matter of time». Now we learn, however – come on data of the IMF – which in a context of global recession, Eurozone countries will be the ones most affected by the economic slowdown. Therefore, if the sanctions have undoubtedly created problems for Moscow, at the same time they have not decreed the collapse that the Western world expected and hoped for. Instead, they considerably weakened the commercial strength of the Old Continent by slowing down its industrial production due to high energy costs.

Even the IMF itself had to revise the growth estimates of the Russian economy several times: initially, in fact, it had forecast a contraction in growth of 8.6%, in July the forecast had dropped to 6% and in October to 3.2%. Meanwhile, the Moscow economy has demonstrated its enormous resistance thanks to the maneuvers of the governor of the Russian Central Bank, Elvira Nabiullina, and to the appreciation of the ruble, largely due to the Kremlin’s strategic move to demand payments for energy supplies in rubles rather than in dollars or euros. All this has shaken the entire international economic balance giving way to new global payment systems which are progressively undermining the hegemony of the dollar as the reference currency in international exchanges.

The Russian Finance Minister, Anton Siluanov, has stated that the decline in Russian GDP in 2022 was 2.7%, also explaining that the decline could continue in 2023: «The latest data show that GDP for the current year will fall to around 2.7%, it is still possible that the decline will continue next year, according to our forecasts,” he said. Moscow’s economy has therefore also been hit by the global slowdown and Western sanctions. However, the latter not only have not had the disruptive effect desired by the West, but have also opened up the possibilities for the emergence of new financial systems and new trade routes just as an antidote to sanctions. Not surprisingly, Russian Prime Minister Mikhail Mishustin said at a government meeting that the negative forecasts of Western analysts on the economic situation in Russia have not come true. In particular, “the country’s GDP for 11 months decreased by only 2% compared to the same period last year, despite all the sanctions,” he said.

The ranking drawn up on the basis of IMF data not only highlights the inaccuracy of Western analyzes and forecasts regarding the collapse of Moscow, but also shows how the Western economy is destined to be supplanted by Asian powers if the average growth trend will continue in the same way: theIndiaindeed, this year it replaced the UK among the top five economies in the world, ranking fifth with a GDP of 3,468.6 billion dollars. The sanctions, therefore, are contributing to the collapse of Western economies more than those of Russia and Asia: according to IMF data, in fact, to be more exposed to recession expected in 2023 they are precisely the European Union and the United States, to which China is added due to the Zero Covid policies. Meanwhile, Russia is holding up the shock and India is advancing, while new international balances are taking shape.

[di Giorgia Audiello]

After 10 months of sanctions…Russia entered the top 10 world economies