A year of war has changed the Russian economy

Abstract

In March 2022, after its illegal and brutal invasion of Ukraine, Russia was hit by a triple whammy: a financial shock, a trade shock and an uncertainty shock. Skillful actions by the central bank, hefty export revenues and vastly increased public spending cushioned the Russian economy against the impacts of a full-blown crisis. Russian businesses spared no effort in adjusting and finding alternative suppliers of components and inputs. As a result, the 2022 GDP decline of 2.1 % was milder than expected a year ago. Compared to pre-war growth forecasts, Russian economy was about 5 % smaller last year.