Six months after Russia invaded Ukraine, there is “furious debate” about how the Russian economy is performing, says The Economist. Many claim it is being crippled by Western sanctions and the exodus of international firms. But Moscow is actually “doing better than even the most upbeat forecasts predicted”. Goldman Sachs data shows that the economy is recovering from its initial dip. Other analyses suggest that although the country is in recession, it is “not a deep one” by Russia’s unenviable standards. Inflation is easing. The labour market is holding up. Imports are “bouncing back fast”.
Three factors explain why Russia “keeps beating the forecasts”. The first is that it has, so far, been able to continue exporting vast amounts of highly priced oil and gas – €85bn worth to the EU alone. The second is policy. Vladimir Putin has “little understanding of economics”, but he employs plenty of people who do – and after the invasion, these “highly qualified wonks” took swift action that prevented economic collapse. The third, perhaps least appreciated, factor is cultural. This is Russia’s fifth economic crisis in 25 years, and anyone over 40 still remembers the “extraordinary economic tumult brought about by the fall of the Soviet Union”. When the going gets tough, Russians have learned to “adapt, rather than panic (or revolt)”. That, as much as anything else, is enabling their economy to keep “stumbling along”.