The economy is expanding despite unprecedented sanctions from the West
© Getty Images / TomasSereda
Russia’s GDP grew by 5.1% year-on-year in the third quarter of 2023, the country’s central bank said in its latest monetary policy report published on Tuesday.
According to the regulator’s estimates, the Russian economy showed significant growth in both the second (4.9%) and the third quarters, prompting the central bank to upgrade its GDP forecast for the year to 2.2-2.7%.
“According to our estimates and current data on economic activity, GDP growth in the third quarter exceeded expectations. The main driver was investment demand, which was largely fueled by budget expenditures,” the head of the regulator, Elvira Nabiullina, said in the report. She cited strong domestic demand and growth in manufacturing industries as the drivers behind the improved GDP performance.
“The increase in companies’ own funds, along with budget expenditures and credit growth, allowed businesses to expand investment plans. According to enterprise monitoring data, companies in recent months have become even more optimistic about future investments in expanding production,” Nabiullina added.
Russia has faced unprecedented economic sanctions from the West over the Ukraine conflict. The restrictions have deprived Moscow of the ability to conduct international transactions in dollars and euros, and have cut Russia’s access to the Western banking system. As a result, the country’s GDP contracted by 2.1%. in 2022.
READ MORE: Kremlin admits surprise at Russian economic growth
However, recent data shows that the Russian economy has now largely recovered from that slump. President Vladimir Putin said in September that GDP had already reached the same level as 2021, prior to Western sanctions.
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