March 21, 2025 (EIRNS)—After suffering a GDP decline of 1.2% in 2022 on account of sanctions imposed by the West, Russia’s economy has grown by 4.1% in both 2023 and 2024. This occurred despite a hostile environment: more than 16,000 sanctions of various sorts, the freezing or theft of financial assets held abroad, and the destruction of natural gas pipelines. How did Russia succeed?
In his contribution to this year’s Raisina Dialogue, held by India’s most prominent think tank, the Observer Research Foundation, Russian economist Alexander A. Dynkin explains:
There are three main causes for Russia’s resilience, he says: 30 years of market reforms, experience dealing with stress and shocks, and miscalculations by the West in its ability to isolate Russia economically.
Russia has dealt with a number of bank crises since the fall of the Soviet Union, providing experience to deal calmly with the current environment.
Economic shifts allowed Russia to continue to grow. “Oil producers made a dramatic redirection of export flows,” explained Dynkin, who is the President of the Primakov National Research Institute of World Economy and International Relations at the Russian Academy of Sciences. “While in 2021, almost 100% of crude oil exports went to Europe, by the end of 2022, 80% went to Asian markets.” Russia’s top three trading partners shifted from China, Germany, and the Netherlands, to China, India, and Türkiye. “Paradoxically,” he adds, “Russia remains the second LNG supplier to the EU.”
Sanctions stimulated domestic production, with import substitution driving new production. “The intention is to manage inflation not only through demand compression but also through supply growth and the liberalization of entrepreneurship.”
Sanctions against Russia serve to strengthen ties with Eurasian Economic Union and BRICS countries. The sanctions are having a “boomerang effect.”
“Russia could manage, not without difficulties,” he concludes, “to increase defense production and at the same time maintain and even improve the living standards of the population.”
