Russia’s economy has finally fallen into recession, 8 months after it invaded Ukraine
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Eight months after it attacked Ukraine, Russia’s economy has finally fallen into a recession, according to official data from Moscow released Wednesday.
Its GDP fell by 4% in the third quarter of the year from a year ago, according to Rosstat, Russia’s statistics agency. This followed a 4.1% year-on-year decline in its second-quarter GDP — meaning the country has fallen into a technical recession after two straight quarterly contractions.
Though the textbook definition isn’t necessarily indicative of a serious downturn — Russia’s third-quarter GDP slide was in milder than the 7% decline it had expected earlier — Elvira Nabiullina, the country’s top central banker, said Tuesday the country needs to look at the economic situation “very soberly with open eyes” and be prepared for any development, according to news agency Interfax.
“Yes, the situation can worsen, we understand this,” Nabiullina told Russian lawmakers, according to the news agency, adding it was necessary to restructure the economy.
Nabiullina’s assessment of the economy followed months of intensifying sanctions against Russia over its invasion of Ukraine. International companies have exited Russia en masse, while much of its currency and gold reserves have been frozen since the start of the war on February 24.
And while firm energy prices had propped up Russia’s economy for a while, the tide seems to be turning — in part, due to President Vladimir Putin’s partial mobilization order that sent many fleeing the draft. Research from the Bank of Russia showed the country’s economic activity stalled in September.
Russia’s central bank expects the country’s economy to contract by 3% to 3.5% in 2022, Nabiullina said on Tuesday, according to an official transcript.