President Vladimir Putin said on Tuesday night that the Russian economy performed better than expected, after Prime Minister Mykhailo Mishusin told him that gross domestic product growth and inflation were surprisingly good, Reuters reported.

Prime Minister Mykhailo Mishustin and President Vladimir PutinPhoto: Oleksandr Kazakov / Sputnik / Profimedia

GDP growth this year may exceed 2 percent, and consumer price growth may not exceed 5 percent annually, Mishustin told Putin during a meeting in the Kremlin.

The International Monetary Fund expects the Russian economy to grow by 0.7 percent this year. Analysts polled by Reuters in late June had forecast GDP growth of 1.2 percent and inflation of 5.7 percent in 2023.

“Our results, at least for the moment, let’s say cautiously, are better than previously expected, better than expected,” Putin said, according to the Kremlin.

Russia’s economy is set to contract by 2.1 percent in 2022 and came under particular pressure last spring when Kyiv’s allies imposed sweeping sanctions against Moscow over its invasion of Ukraine.

Russian technocrats have helped offset some of the blow by reorienting the economy and boosting it with money from state reserves, with the finance ministry earlier saying government spending in the first five months of the year was 26.5 percent higher than last year.

“Dear Volodymyr Volodymyrovych…”

On Tuesday, Misushin told Putin that he was confident that, barring force majeure, the economy would perform well this year.

“Dear Vladimir Volodymyrovych (Putin), the country’s economy continues to confidently recover, despite the sanctions, despite all the obstacles that are placed against our country,” Misusin said.

However, the impact of the sanctions has been painful, blocking access to Western financial markets and many export markets for Russian companies and goods.

Oil and gas revenues, vital to the Russian budget, in January-May this year were almost twice as low as in the corresponding period last year due to lower Urals oil prices and a decrease in natural gas exports.

Finance Minister Anton Siluanov has repeatedly stated that Russia’s budget deficit this year will not exceed 2% of GDP, although most analysts disagree. The International Monetary Fund is among those who expect Russia to run a much larger budget deficit this year.