Russia’s flagging economy reveals structural problems

Oil production facility in Russia

Heavy dependence on commodity exports poses a threat to the Russian economy.

(Photo: IMAGO/ITAR-TASS)

Riga Opinions differ on how severe the decline will be. In essence, however, the economic forecasts coincide: Russia’s economy will in all likelihood continue to shrink in the coming year.

The International Monetary Fund (IMF) assumes that economic output will fall by 2.3 percent. The World Bank is even forecasting a decline of 3.6 percent, while Deutsche Bank expects a drop of 2.8 percent. The Russian central bank, which assumes that the gross domestic product (GDP) will fall by one to four percent, remains vague.

Ten months have passed since the start of the full-scale attack on Ukraine on February 24. And many economists are now assuming that the downturn is likely to be less sudden than was thought when the first western sanctions were passed. But that it might take longer for that.

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