Despite being in a state of war, Russia’s economy is expected to grow by 3.2% in 2024, surpassing growth rates predicted for major advanced economies such as the US. This has surprised many in Western countries who had hoped that imposing sanctions on Russia would severely hinder its economy and put pressure on Putin’s government. However, the International Monetary Fund (IMF) anticipates that this momentum will slow down in 2025, with Russia’s growth rate dropping to 1.8%.
Russia’s steadfastness against Western sanctions can be attributed in large part to its strong partnership with China. Trade between the two countries hit a record high of $240 billion last year, driven by China’s demand for essential Russian commodities that have been discounted due to the West’s reluctance to engage in trade with Russia. Additionally, as foreign companies pull out of Russia due to the war in Ukraine, the government in Moscow has been seizing funds from these fleeing firms, with reports indicating they have taken $387 million as of mid-March.
The growth rate for 2024 would validate Putin’s claims that Russia has been able to withstand the effects of Western sanctions and trade restrictions. Despite this, many are concerned about what will happen when the oil price cap set by G-7 countries takes effect and how it will impact Russia’s energy sector. However, sustained exports of oil and commodities to major markets such as India and China have kept Russia’s energy sector resilient despite these challenges.
