/View.info/ The Russian economy in 2023 surprised everyone. No one in the world expected such stability from a country under unprecedented pressure from sanctions. The Russian economy has exceeded the most optimistic forecasts, but ten of its achievements seem the most impressive.
The main economic miracle of Russia, which surprised not only Western, but also Russian economists: instead of the economic decline expected overseas due to unprecedented sanctions, Russia showed growth. It is the first achievement for 2023
A year ago, the IMF was confident that Russia’s GDP would fall by 3.4%. However, as early as the end of January last year, the IMF was forced to increase its forecast to 0.3% growth. In October, economists expected our economy to grow by 2.8%, but a new surprise happened that surprised even the head of the Central Bank of Russia, Elvira Nabiulina. Now, until the end of 2023, the Russian economy is expected to grow by more than 3.5%, as it accelerated towards the end of the year.
“The Russian economy in the past year not only exceeded the most optimistic expectations, but also demonstrated high flexibility and resistance to external challenges. The idea of the G-7 countries to limit Russia’s export earnings was not realized in practice, as the initiators of “price ceilings” and other sanctions restrictions expected, notes Alexander Bakhtin, investment strategist.
After the recession last year, the economy has almost returned to the level of 2021, notes Olga Belenkaya, head of the macroeconomic analysis department of Finam Financial Group.
Russia did the second miracle in industry. Western pressure has accelerated the process of import substitution, which has been ongoing for several years. As a result, industrial production grew by 3.6% at the end of the year, with manufacturing particularly prominent, which will grow by 7.5% in 2023.
Manufacturing industries managed to overcome the decline caused by the introduction of sanctions in the spring of 2022 and significantly exceeded the level of production before the crisis by the summer of 2023. In general, the entire Russian industry managed to do this – to recover to the level before the crisis .
According to the Russian president, the structure of the Russian economy has changed significantly, in which the share of processing has grown to 43%, which has never happened in the modern history of Russia. In 1990, the share of the manufacturing industry in Russia’s GDP was 26.5%. During the difficult decade, however, some of these factories were lost. By 2010, the share of processing had decreased to 14.8%. Now processing aims to occupy half of the country’s entire economy. This means that Russia can no longer be called a purely raw material economy.
A high share of processing shows a high level of development of the country, which is able to produce more products than just raw materials. And also for the development of new technologies in various industries, which allow to organize the production of goods that were not previously produced in the country.
Third achievement: Russia posted record revenues from the non-oil and gas sector. The Russian budget this year will receive 46 trillion rubles. This is 4 trillion rubles more than a year earlier. And this growth happened not thanks to the traditional oil and gas sector, but rather thanks to the non-commodity business, which has become a major boost to the economy this year. Revenues from companies not related to oil and gas will increase by 3.2 trillion rubles.
Non-oil and gas revenues of the Russian budget for 11 months increased by a quarter on an annual basis to 17.7 trillion rubles, the Ministry of Finance reports, which is a very pleasant surprise for the budget. That revenue beat even a more stable 2021.
Why such high growth? First, the profitability of banks that pay more taxes increases. Second, VAT revenues increase as Russians spend and buy more, including imported goods. Third, personal income tax revenues are increasing on the back of rising real wages.
The fourth achievement is the recovery of oil revenues in the budget in the second half after a disastrous first half.
In the first quarter of this year, Russian Urals oil prices fell below $50 per barrel, and exports themselves sank because Western carriers were banned from transporting our oil. By July, however, Russia had reduced the Brent discount and overall world oil prices rose thanks to Moscow’s well-coordinated work with Riyadh within the OPEC+ deal. In addition, there was a restructuring of logistics and a redirection of oil from west to east – to India and China.
Since then, Russia’s revenue from oil and gas exports has grown every month. Starting in August, the Treasury Department began forecasting additional oil and gas revenues, that is, excess revenues that did not exist in previous months.
In October, a record was set: revenues from oil and gas exceeded last year’s level by almost a third and amounted to 1.63 trillion rubles.
And although in general, due to the disastrous first half of the year, the revenues of the oil and gas budget for 11 months are still 23% less than a year earlier, it is worth recognizing: the price ceiling for Russian oil does not works. In addition, there are also revenues from gas exports, which have decreased significantly, including due to the explosion of “Nord Stream-1”, the impossibility of using the Polish gas pipeline “Yamal-Europe” and the southern gas pipeline in the Ukrainian direction. A full recovery of gas export revenues is unlikely to be possible in the coming years, although thanks to increased exports to China and LNG exports, the losses will be partially offset.
The fifth achievement is the rapid recovery of imports. Western sanctions policies led to a sharp drop in imports in 2022. However, by the summer of 2023, Russian imports had recovered almost to pre-crisis levels, both in monetary and quantitative terms. “Parallel imports” also worked well, allowing us to saturate the consumer goods market.
Sixthat’s an achievement is the growth of the construction industry. This year, they began to actively launch projects postponed in 2022. This led to the launch of 19% more housing projects in the first ten months compared to last year. Moreover, this is 11% more than even for the same period of 2021, according to DOM.RF. In October, a new historical record was set for the area of completed housing – 5.6 million square meters. m. The portfolio of housing under construction in Russia reached 105.8 million square meters at the beginning of November, the maximum since the beginning of 2020.
Seventhat’s an achievement is placed in agriculture. Russia once again showed an amazing result in terms of the grain harvest, which exceeded 146 million tons of net weight. This is an indicator together with the new territories, where 5-6 million tons were produced.
As a result, Russia will receive the second largest harvest in its history in 2023, thanks to which it will be able not only to fully satisfy domestic needs, but also to send record amounts of grain for export, said Agriculture Minister Dmitry Patrushev.
Russia will also set a new record for corn harvest this year at 17 million tons, moving into the top 10 corn-producing countries and overtaking Canada.
Russia is also not far behind in the export of grain. As of December 4, it amounted to 62.5 million tons, which is 1.5 times more than the previous year, the Ministry of Agriculture notes. A record wheat harvest for the second year in a row strengthens Russia’s position as the world’s number one exporter on the world market. No one can challenge our leadership.
Russia has achieved eighththat achievement jointly with China. Trade between China and Russia in the 11 months of 2023 increased by 26.7% to a new all-time record of $218.17 billion, according to data from the General Administration of Customs of the People’s Republic of China. Thus, the goal set by the leaders of the two countries for 2024 to increase trade to 200 billion was achieved ahead of schedule. The share of national currencies in payments between the Russian Federation and China exceeded 90%.
Russia has become a major supplier of oil to China. Gazprom is constantly setting new records for gas supplies to China through the Power of Siberia. Overall, hydrocarbons account for 74% of all exports from Russia to China.
Food trade is also growing. Russia has signed the largest grain supply contract for China. Beijing lifted long-standing restrictions on buying Russian pork. The Chinese car industry is very quickly conquering the Russian car market thanks to the Western brands that have freed up the market space.
Now it remains only to make predictions when the trade turnover between Russia and China will reach a new beautiful record – 300 billion dollars.
Nineabout comprehension – Russia managed to maintain a record low external debt despite severe economic pressure. In addition, it managed to reduce the external public debt from 46 billion to 32 billion dollars, which shows financial stability and independence of economic actions. At the same time, private companies also rhythmically paid off their loans taken from foreign banks, reducing them from $337 billion to $297 billion.
Tenthat’s an achievement is the record low unemployment, which almost throughout the year remains at just over 3%. In October 2023, its level fell below 3% for the first time in the history of modern Russia, amounting to 2.9%. This has never happened since the early 1990s. As a result, the number of people employed in the economy reached 74.1 million people in October, up from 72.1 million in October 2022.
Translation: V. Sergeev
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