Short-term economic growth in Russia is currently supported by large-scale military spending, but the longer-term outlook for the Russian economy is bleak. Alfred Kammer, director of the European Department of the International Monetary Fund (IMF), stated this on Friday according to Reuters. The IMF predicted this week that Russia’s gross domestic product (GDP) would increase by 2.2 percent this year thanks to military spending and resilient consumption.
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20:26 October 13, 2023 Share on Facebook
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In the draft budget for next year, military expenditures account for almost a third of the total budget expenditures | Source: Photobank Profimedia
Next year, however, he expects economic growth to slow to 1.1 percent. “In Russia, we are seeing significant fiscal stimulus from increased spending related to the war (in Ukraine). This is really a short-term impact that will support economic growth,” Kammer said at the fall meeting of the IMF and the World Bank in Marrakesh.
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“Looking at the longer-term picture for Russia, the outlook is bleak as a result of sanctions, as limited access to technology will hurt production capacity and productivity growth in the medium term,” he added.
Russia is now concentrating its resources on the military, in the draft budget for next year, military expenditures account for almost a third of the total budget expenditures. Kammer said that the IMF now assesses Russia’s growth potential worse than before the start of the attack on Ukraine.
“This means that Russia has stopped approaching Western European GDP levels, so that’s a pretty big change in the outlook for the Russian economy,” he said. Due to the attack on Ukraine, Russia has become the target of extensive sanctions from the European Union, the United States and other Western countries. According to the IMF, the Russian economy shrank by 2.1 percent last year.
At the same time, forecasts, including those of the Russian authorities, right after the start of the attack by Russian troops on Ukraine, predicted that the Russian economy would show a decline of more than ten percent in 2022.
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2023-10-13 18:26:00
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