Russia's economy grows despite sanctions

Despite the heavy sanctions it faced following its invasion of Ukraine in 2022, Russia grew by 4.3 percent in 2023, surpassing all G7 countries. During the same period, the US economy grew by 2.8 percent, while the United Kingdom saw growth of 1.1 percent. The Kremlin's increased military spending stands out as the primary driver of this growth.

Having largely lost the European market following the sanctions, Russia maintained its stability by redirecting its energy exports to Asian countries such as China and India. Additionally, a network of tankers known as the "shadow fleet" proved effective in bypassing sanctions.

The Russian ruble gained more than 40 percent in value in 2024, becoming the best-performing currency. Bank of America attributes this situation to capital controls and high-interest-rate policies.

However, economic growth is creating pressure on internal balances. While high inflation has pushed interest rates up to 20 percent, labor shortages are also increasing. According to the Higher School of Economics in Moscow, a labor shortage of approximately 2.6 million people emerged in Russia by the end of 2024. Reasons for this include the male population going to the front lines due to the war or fleeing abroad.

Russian Minister of Economic Development Maxim Reshetnikov stated that the country's economy is approaching a recession following overheating.