---
title: "Russian Economy Shrank 2.1% Last Year, Less Than Once Expected"
description: "Russia’s economy contracted 2.1% last year, defying the worst fears of a major recession as surging commodity exports helped offset the impact of US and European sanctions imposed over President Vladimir Putin’s invasion of Ukraine."
type: "NewsArticle"
publisher: "Daily Maverick"
site: "https://www.dailymaverick.co.za"
section: "Business Maverick"
author: "Bloomberg"
author_url: "https://www.dailymaverick.co.za/author/bloomberg/"
canonical_url: "https://www.dailymaverick.co.za/article/2023-02-20-russian-economy-shrank-2-1-last-year-less-than-once-expected/"
published: "2023-02-20T18:33:26"
updated: "2023-02-20T18:34:35"
lang: "en-ZA"
word_count: 153
---

# Russian Economy Shrank 2.1% Last Year, Less Than Once Expected

> Russia’s economy contracted 2.1% last year, defying the worst fears of a major recession as surging commodity exports helped offset the impact of US and European sanctions imposed over President Vladimir Putin’s invasion of Ukraine.

By Bloomberg · Published 20 February 2023, 20:33 SAST · Updated 20 February 2023, 20:34 SAST

## Key points
- Russia's economy has seen a better than expected result in the last year, with a 3% decline instead of the 10% drop initially forecasted. Wholesale and retail trade, manufacturing and transport have been hit hardest, while mining, agriculture, construction and government spending have grown. The central bank projects growth may resume this year, but there are still few reasons for recovery according to Locko Bank's Dmitry Polevoy. Bloomberg Economics estimates that the economy will lose $190 billion in GDP by 2026 relative to its pre-war trajectory.
- Russia's economy saw a 1.3% decline in 2020 despite sanctions, with the hardest hit sectors being wholesale and retail trade, manufacturing and transport.
- The result is better than expected, with Locko Bank economist Dmitry Polevoy calling it "a good result".
- Despite this, there are still few reasons for a recovery, with Bloomberg Economics estimating that the economy will lose $190 billion in GDP by 2026 relative to its pre-war trajectory.
- The Central Bank projects growth may resume this year.

## Content

The preliminary result was better than the 3% decline officials expected as recently as the early fall and far short of the 10% drop some forecasters saw when the sanctions first hit just over a year ago.Hardest-hit were wholesale and retail trade, as well as manufacturing and transport, the Federal Statistics Service said on Monday, while mining, agriculture, construction and government spending grew last year.

[Putin’s War to Lop $190 Billion Off Economy in Delayed Reckoning](https://www.bloomberg.com/news/articles/2023-02-17/putin-s-war-to-lop-190-billion-off-economy-in-delayed-reckoning)

“It’s a good result,” said Dmitry Polevoy, economist at Locko Bank. “But this is all in the past. What matters is the future and here there are still few reasons for a recovery. In the base case for 2023, we still see a small contraction of 1%-2%.”

The central bank projects growth may resume this year. Bloomberg Economics estimates that the economy will lose $190 billion in gross domestic product by 2026 relative to its pre-war trajectory.