The secret to keeping Russia's economy growing

However, increased military equipment production and large-scale state spending are keeping Russian industry afloat, helping to cushion the economic impact of Western sanctions and allowing Moscow to continue its military campaign in Ukraine.

Russia reported a deficit of 1 trillion rubles (about $12.9 billion) in April, according to data released on May 10. In the first quarter of 2022, Russia had a budget surplus of 1.13 trillion rubles, but since then, large expenditures on the special military operation in Ukraine and Western sanctions on Russia's vital oil and gas exports have hit the budget.

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Russian President Vladimir Putin. Photo: RIA Novosti

In just the first four months of the year, the spending gap in April has left Russia's deficit 17% higher than the government 's plan for a deficit of 2.9 trillion rubles in 2023 overall.

Finance Minister Anton Siluanov has repeatedly said that Russia's budget deficit this year will not exceed 2% of GDP, although most analysts disagree with that forecast. The International Monetary Fund (IMF) is among those who believe Russia will see a much larger budget deficit this year.

According to Reuters, Finance Minister Anton Siluanov recently said that oil and gas revenues - down 52.3% year-on-year according to data on May 10 - will be crucial for Russia to reach the 2% target.

Amid falling revenues, Moscow has been forced to start selling international foreign exchange reserves to cover the deficit. However, there are no signs of an economic collapse, according to Andriy Klymenko, a strategist at the Black Sea Institute for Strategic Studies. The Russian economy is not in the economic disaster that experts around the world predicted after unprecedented sanctions were imposed due to the conflict between Russia and Ukraine.

Russia's GDP fell by 8% due to sanctions but grew by 5% thanks to arms production, according to Klymenko. According to World Bank data and statistical analysis conducted by Sputnik, Russia has also returned to the Group of 10 largest economies in the world and ranked 8th for the first time since 2014, with the value of goods and services reaching $2.3 trillion in 2022.

Spring Mai

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