OUR Russian economy decreased by 0.4% in the first half of 2022 compared to last year, but capital expenditure, one of the main drivers of economic growth, rose by 7.8%, data show federal statistical agency Rosstat which were announced on Wednesday. According to Reuters, the six-month data can be seen as clearly better than expected in a country that has spent six months in a war of attrition with increased military spending, and despite fears that its wide-ranging Western sanctions will bring its economy to its knees. .

The export-dependent Russian economy does indeed remain relatively stable, but Western estimates suggest that efficiency sanctions in the medium term. The economy will contract by less than 3% in 2022, a senior government official said this week, despite an earlier Treasury Department forecast of a contraction of more than 12%, the biggest since the mid-1990s crisis.

The Russian economy shrank by 0.4% in the first half of 2022 compared to the same period last year.

In the second quarter alone, capital expenditure rose 4.1% year-on-year after a 12.8% increase in the first quarter, with most of the growth coming from the mining and manufacturing sectors. Rosstat data has belied predictions that the Russian economy will collapse this year under the weight of unprecedented Western sanctions that have frozen about half of Russia’s gold reserves as higher prices for oil and gas exports cushion the impact.

Official unemployment hit a record low of 3.9% in July, but inflation-adjusted real wages fell 3.2% year-on-year in June. The data also showed that retail sales – a measure of consumer demand – fell 8.8% year-on-year in July after falling 9.6% the previous month. Consumer prices in Russia continue to fall for the eighth week in a row after a sharp increase in the first period after the invasion of Ukraine.

A fall in the consumer price index could open the door for further interest rate cuts by the central bank to support the economy.