Russia's economy reels under war and sanctions

Diana Estefanía Rubio

Russia's economy reels under war and sanctions

The Russian economy witnessed considerable economic strain following Russia’s invasion of Ukraine and the imposition of sanctions by the United States and its partners.

This led to a contraction of the Russian economy in 2022 by 2.1%, driven by a 14% contraction in exports and an 11% decline in imports over 2021, among other factors.

Austerity measures were imposed, and defence spending was prioritised. Financial sanctions on Russia, export controls, and a price cap on Russian oil have made it more difficult for Moscow to source key high-tech components and other needed inputs.

The ruble depreciated (roughly 20% against the dollar from early February 2022 to December 2023), inflation rose, and the labour market constricted. The average Russian saw a significant decline in living standards during this period.

Higher oil exports, however, have helped offset further economic contraction.

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