According to the data, Russia’s economy is expected to contract by about 2 percent in 2022, a low drop that would suggest a mild recession. This figure entered the political debate: for some, this low number is a sign that the Russian economy is stable and that the sanctions imposed by the countries are not working. Others think that Western sanctions should be stepped up and the pressure increased. These conflicting arguments have one thing in common: They are based on largely unsubstantiated numbers.
Even if Russia’s reported GDP decline were true, it is clear that several factors artificially inflated Russia’s economic growth in 2022. First, production of Russian turbo-engined military equipment boosted the economic growth gauge. However, the production of tanks and military equipment does not improve the standard of living, and this part of Russia’s GDP will soon disappear on the battlefield. Russia’s export earnings increased in 2022 due to war-induced energy price increases.
More important than what Russia’s rise means is that Kremlin officials cannot be trusted.
The last few weeks provide a good example of this strategy in real life. In January, the International Monetary Fund published an analysis of Russia’s 2022 recession as part of its World Economic Outlook. In 2022, the Russian economy contracted by 2.23 percent. These data surprised many analysts, especially since before the IMF was more pessimistic about the economic situation in Russia.
The second reason for the misinformation from Russia is the longer release time of low data. This is exactly what happened shortly after the release of the optimistic IMF figures when the Russian State Statistics Service suddenly delayed the release of real GDP statistics.
It has always been difficult to analyze the effectiveness of sanctions. The Kremlin has classified all available statistics since the start of the war, including foreign trade, which provides insight into the current state of Russia’s energy sector. The Russian president hopes that turning Russia into a black box will help his claims that sanctions are not working, confusing Western politicians and citizens.
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