Russia’s GDP contracted 4% in the second quarter

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Russia’s gross domestic product (GDP) registered between April and June a contraction of 4% compared to the second quarter of 2021, thus reflecting the impact of the invasion of Ukraine and the sanctions on the country, according to the preliminary estimate published by the Russian statistical agency, Rosstat.

The contraction of Russian GDP in the second quarter, although less intense than forecast by various international organizations, is the largest since the second quarter of 2020 and contrasts with the growth of 3.5% year-on-year in the first three months of 202.

The Bank of Russia already expressed last July its confidence that the GDP contraction in 2022 would be less intense than initially feared, limiting it to a range of between 4% and 6%, while for 2023 it would fluctuate between 4% and 1% to return to growth in 2024, with an estimated expansion of between 1.5% and 2.5%.

In this sense, the deputy governor of the entity, Alexey Zabotkin, has pointed out this Friday that the lowest point of the fall in GDP will be exceeded “in the first six months of 2023”, after which the Russian economy will move towards a new long-term balance.

In its latest macroeconomic projections, published at the end of July, the International Monetary Fund (IMF) improved its forecast for Russia in 2022, when it anticipates a 6% contraction in GDP, less severe than the 8.5% drop forecast in April , although it worsened the contraction in 2023 to 3.5%, compared to the 2.3% decline it previously forecast.

Russia’s Composite Purchasing Managers’ Index (PMI), published at the beginning of August and considered a leading indicator of economic activity, showed an acceleration in private activity, reaching 52.2 points in July from 50.4 in the previous month, his best reading in a year.

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