Despite a worldwide Western propaganda blitz that Russia’s economy would contract by 25% to 35% following the Western-imposed comprehensive sanctions, Russia’s current account surplus grew (see accompanying slug), while its domestic physical domestic economy grew but at a modest scale. The sanctions likely will cause some dislocation and pain, but British Foreign Secretary Liz Truss’s vision of “crushing” the Russian domestic physical economy is falling short of its objective.
During the first quarter of 2022, Russia’s GDP rose at an estimated 3.7% rate compared to the first quarter of 2021, the nation’s Economic Development Ministry reported April 27. Russia’s GDP had risen by 5% in the fourth quarter of 2021, compared to the same quarter a year earlier.
The large-scale Western sanctions came mostly in March 2022, so the effect would have registered mostly in March and subsequent months. Russian GDP growth in March of 2022 was up 1.6% compared year-on-year to March 2021.
GDP is a very poor measure of an economy, but it can indicate some directions.
The Russian Economic Development Ministry’s press release noted that for March 2022, Russia’s manufacturing output fell by 0.3% (all at annualized rates), its construction work rose by 5.9%, its transport cargo shipments grew by 3.5% (although air cargo shipments fell), and the turnover of retail trade and food services rose by 2.9%.
