Western sanctions and military defeats could’ve destroyed Russia’s economy. But not only has it emerged unscathed, it’s actually on the path to growthTo counter the economic crisis brought on by the sanctions and the military defeats in Ukraine in the summer of 2022, the Russian government changed tack by engaging in Military Keynesianism. At its core, this describes a state-driven macroeconomic policy that aims to boost aggregate demand through higher military spending. Russia has tripled its military spending since the invasion of Ukraine.
Rising industrial production is driving the Russian economy out of years of stagnation. In 2023, GDP rose by 3.6 per cent, with growth of 2.5 to 3 per cent expected for this year.
The country’s demand-oriented economic policy primarily benefits companies in the defence sector, but also supports suppliers in industries such as mechanical engineering and steel. These have long called for a more protectionist economic policy, as their Western – and increasingly Chinese – competition dominates global markets. Workers in the manufacturing sectors are also reaping the rewards, having been among those to lose out the most in Russia’s transition to capitalism. While social hardship and unstable employment conditions have dominated these people’s day-to-day lives over the past 30 years, they have seen their material situation significantly improve since the war began. Real incomes rose by 5.8 per cent in 2023 according to the state-run Russian statistics office Rosstat. Despite some significant regional differences, wages in manufacturing have more than tripled, in some cases even increasing fivefold.
Trade with Eurasian Economic Union (EAEU) member states, as well as with India, Iran and Africa, is also gaining ground. It is striking that Russia is not only supplying raw materials to these countries, but also that efforts are being stepped up to open up new markets for the agro-industrial complex, the IT sector and mechanical engineering, as well as the traditionally global defence industry.
The Russian GDP is on the rise now.
We were told sanctions would crush the Russian economy. That has turned out not to be true either.
So the entire US Ukraine policy is wrong if sanctions are a failure?
You and the Western governments may not wish to accept the Russian economy is growing but it seems to be.
One fact was. The rest of the article is correct. The fact remains that the Russian economy rose in 2024 not 2023. And the Russians transformed/changed their economy to negate the sanctions and grow their war making ability.
The Russians have been inconveniently resilient.
No, Trading Economics does not directly receive data from the Federal Reserve (Fed) for Russian economic indicators; instead, it pulls data from official Russian sources, including the Central Bank of Russia, government agencies, and international organizations like the World Bank, to provide information on the Russian economy on its platform.