The Russian economy contracted sharply in the second quarter as the economic fallout from the war in Ukraine began to be felt.
The economy shrank by 4 percent from April to June compared to the previous year, the Russian statistics authority announced on Friday. It is the first quarterly gross domestic product report to fully capture changes in the economy since the February invasion of Ukraine, when Western sanctions sealed off Russia from much of the global financial system and many countries broke trade ties with Moscow. It was also a sharp reversal from the first quarter, when the economy grew 3.5 percent.
Even as imports to Russia dried up and financial transactions became so severely blocked that the country was forced to default on its external debt, the Russian economy has proven more resilient than some economists initially expected. However, analysts believe the economic strain will only increase as Western nations increasingly turn their backs on Russian oil and gas, a key source of export earnings.
“We thought there would be a deep dip this year and then level out,” said Laura Solanko, a senior adviser at the Bank of Finland Institute for Economies in Transition. Instead, there has been a milder economic contraction, but one that will continue into next year, pushing the economy into a shallower recession for two years, she said.
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