Many economic activities have improved together, helping Russia's GDP increase for two consecutive quarters, after shrinking for a year due to the war in Ukraine.
Russia's statistics agency Rosstat said this week that according to preliminary estimates, the country's growth in the third quarter was 5.5% compared to the same period last year, with many economic activities showing acceleration, from retail, manufacturing, construction to agriculture .
This is the second consecutive quarter of growth in Russia's GDP. The country's GDP increased by 4.9% in the second quarter compared to the same period last year. It was the first time in a year that the Russian economy grew.
Russia’s economy has been in a tailspin since mid-2018, when GDP fell 4.5% following the military campaign in Ukraine. However, the decline has narrowed in subsequent quarters. Bloomberg predicts that the Russian economy could return to pre-conflict levels as early as next year, having adapted to the impact of Western sanctions. In the second quarter, the size of the economy reached 39.39 trillion rubles ($438 billion).
Pedestrians cross the street in Saint Petersburg (Russia). Photo: Reuters
Russia's economic performance is going against forecasts from early last year, when the West thought Russia would collapse because of unprecedented sanctions.
But this did not happen. Increased defense spending boosted industrial production. Meanwhile, consumer demand also increased thanks to support policies and rising wages.
At the St. Petersburg International Cultural Forum on November 17, Russian President Vladimir Putin said the economy was “in good shape” and growth could reach more than 3% this year, a rate slightly higher than previous forecasts.
But Russia is also facing challenges, including labor shortages and a weak currency. The ruble has lost more than 20 percent of its value against the dollar this year, trading above 100 rubles to the dollar several times.
A falling ruble, booming military spending and persistent labor shortages have also pushed prices higher in recent months. Inflation was 11.9% last year and is forecast to be between 7% and 7.5% this year.
Ha Thu (according to TASS, Reuters)
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