Russia may have so far avoided the deep recession the Westerners predicted, but Russian economy it will not emerge completely unscathed from this power struggle with Europe and the US. Until recently, its GDP fell just 2.5% and fell short of forecasts of a 10% contraction despite sanctions, a $300 billion freeze on its foreign exchange reserves and a $60-a-barrel oil price ceiling. Russian oil. But according to the latest estimates from economists who spoke with Bloomberg, the Russian economy should have contracted by 4.6% in the last quarter of last year.

So far, the Russian economy has been largely supported by its allies, as countries that still maintain trade relations with Moscow and refrain from condemning the invasion and war in Ukraine collectively account for more than 30% of global GDP. After all, in a sense, the sanctions were not as harsh as they could have been, since the EU and the US were forced to moderate them in order to ensure the flow of Russian hydrocarbons into their economies. Despite sanctions, Russia produced more oil last year, and high energy prices have brought it a whirlwind of revenue. At the same time, in addition, he exported a large amount of oil to China and India. In addition, by imposing strict capital controls and first raising interest rates and then lowering them again, the Bank of Russia managed to avoid a financial crisis. The price, however, was a rapid decline in consumer credit and a corresponding fall in consumption. Thus, a year after the start of the war, Vladimir Putin may decide that the economic consequences are not enough to change his plans.

It is estimated that in 2026 its economy will be 8% smaller compared to what it would be without the war in Ukraine.

However, according to Bloomberg economists, Russia’s future will be more difficult. A large number of workers have left the factories to fight at the front, and their absence could reduce the growth of the private sector by a percentage point. After all, the war will exacerbate the country’s demographic problem, and its workforce is expected to shrink by 6.5% in the next decade. Thus, it is assumed that in 2026 the Russian economy will be 8% smaller compared to what it would be without the war in Ukraine.

However, Russian consumers are still paying, as evidenced by the data on car sales in the country. While analysts are still arguing about the effectiveness of the sanctions, the industry that has definitely been hit is the automotive industry, as it is heavily dependent on foreign industry and imported parts. Automotive production in Russia has plummeted and is at its lowest level since the collapse of the Soviet Union. At the same time, the expenses of Russians for the purchase of new cars decreased by 52%, and the purchase of new cars – by 58.8%. In contrast, purchases of used cars, which are more affordable for Russians, rose by 145%, given that the inflation in the country is 11.8%, and the average income fell by 1%.