Russia flag Russia: Economic outline

Economic Outline

Economic Indicators

On February 24th 2022, Russia initiated a military conflict on the Ukrainian territory, which profoundly upsets the current political context in both countries and will have substantial political and economic ramifications. For the ongoing updates on the developments of Russia-Ukraine conflict please consult the dedicated pages on BBC News.

The latest specific information on economic sanctions against Russia in response to the conflict in Ukraine is available below:
•    What sanctions are being imposed on Russia
•    The list of global sanctions on Russia for the war in Ukraine

After a strong recovery from the COVID-19-induced recession, the Russian economy contracted again in 2022 (-2.1%), in the context of the war in Ukraine and the subsequent economic sanctions imposed by Western countries (IMF). In 2023, however, the country’s GDP growth was stronger than expected, reaching an estimated 2.2% amid substantial budget support. Due to the Central Bank of Russia tightening monetary policy, which is likely to dampen domestic demand, the IMF outlook indicates a slower growth rate this year (1.1%), with a further decrease to 1% in 2025 (1.3% and 0.9%, respectively, according to the World Bank). In general, Russia's reliance on imports is not that significant, but certain sectors face high exposure, notably transportation equipment manufacturing, chemicals, food products, and IT services. Sanctions limiting access to Western inputs have adversely affected these sectors, prompting efforts to seek substitutes from other countries such as China, Belarus, and Turkey, as well as allowing parallel imports.

Concerning public finances, Russia's federal budget deficit amounted to 1.9% of the country's GDP in 2023, or RUB 3.24 trillion (about USD 36.1 billion), according to preliminary data by the Russian Finance Ministry. The volume of federal budget expenditure totalled RUB 32.36 trillion, a 4% year-on-year increase. On the other hand, revenues amounted to RUB 32.36 trillion (+4.7% year-on-year), with non-oil and gas revenues reaching RUB 20.30 trillion, a 25% increase, whereas oil and gas budget revenues fell by 23.9% to RUB 8.82 trillion. The 2024 budget sees a remarkable surge in spending, reaching RUB 36.6 trillion in 2024 with an expected deficit of RUB 1.595 trillion. As of December 31, 2023, the external debt of the Russian Federation amounted to USD 326.6 billion, marking a decrease of USD 57.0 billion or 14.9% from the end of 2022, as estimated by the Bank of Russia. This decline was primarily driven by reductions in liabilities from various sectors, including loans raised within direct investment arrangements. The rapid decrease in the indebtedness of the general government was influenced by a reduction in the volume of Russian sovereign debt securities. The debt-to-GDP ratio was estimated at 21.2% in 2023 by the IMF and is expected to remain relatively stable over the forecast horizon. In an effort to prevent inflation from getting out of control, the Russian central bank raised interest rates to about 16%; the inflation rate, however, remained relatively high in 2023 (at 5.3%) given the government stimulus packages. The decrease in oil and gas prices throughout 2023 significantly reduced demand for the Russian ruble. Consequently, the currency experienced a depreciation of 30% against the USD since the end of November 2022, coinciding with the implementation of the West's oil embargo and price caps.

Social inequalities remain high, especially between large cities and rural areas: only 1% of the population owns around 70% of private assets. Despite the emergence of an urban middle class, the poverty rate remains at around 14.3% (Rosstat, January-March 2023). According to IMF estimates, the unemployment rate decreased to 3.3% in 2023, from 3.9% one year earlier. It is forecast to drop slightly to 3.1% this year before picking up to 3.5% in 2025 amid lower real economic growth.

 
Main Indicators 20222023 (E)2024 (E)2025 (E)2026 (E)
GDP (billions USD) 2,272.261,997.032,056.842,090.522,117.24
GDP (Constant Prices, Annual % Change) -1.23.63.21.81.3
GDP per Capita (USD) 15,48813,64814,39114,65914,884
General Government Balance (in % of GDP) -1.3-2.5-2.3-1.5-0.6
General Government Gross Debt (in % of GDP) 18.519.720.821.922.8
Inflation Rate (%) 13.85.96.94.54.0
Unemployment Rate (% of the Labour Force) 3.93.23.13.23.5
Current Account (billions USD) 238.0450.5755.8357.1559.34
Current Account (in % of GDP) 10.52.52.72.72.8

Source: IMF – World Economic Outlook Database, 2016

Note: (e) Estimated Data

 
Monetary Indicators 20162017201820192020
Russian Rouble (RUB) - Average Annual Exchange Rate For 1 GBP 90.5475.0983.6180.8892.44

Source: World Bank, 2015

 

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Latest Update: April 2024

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