Introduction

Western sanctions had initially threatened to derail the Russian economy ever since the country invaded Ukraine. However, Russia has shown a resilience that has surprised observers, and which has the potential to realign the global economic order. In a recent article for Business Line, Biswajit Dhar, Professor of Economics at the JNU, points out how observers’ projections for Russia’s GDP contraction and the rouble’s sharp fall have had to be revised as the year progressed.

He points out that in its April forecast, the IMF had predicted Russia’s economy would contract by 8.5% in 2022, an improvement over what was anticipated when the sanctions were imposed. The update in July indicated that the economy would shrink by a lower 6%.

The market has been more optimistic; JP Morgan predicted in July that the country’s GDP would contract only 3.5%. The rouble too, after falling from 76 to 120 versus the dollar, has now stabilised at 60.

What has driven this recovery? 

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