Russia avoided

economic

collapse immediately after the start of the war, but the crisis will deepen in the coming years.

Bloomberg Economics estimates that while the Russian economy will avoid collapse, it will remain under strain and shrink by 8% by 2026 compared to what it would have been had Putin not ordered the attack on Ukraine in February 2022.

Even though Russia recorded its third straight quarter of contraction by the end of 2022, its full-year decline was only a fraction of the nearly 10% collapse predicted a month after the invasion.

The Central Bank estimated last year's decline at the level of 2.5% and predicts a resumption of growth already this year.

"The effect of the sanctions has been prolonged," said Oleg V'yugin, a former high-ranking official of the Central Bank and the Ministry of Finance of the Russian Federation. "And the process of sanctions is not over. New ones are being introduced."

The sanctions did not apply to major Russian exports vital to global markets, such as oil, gas and agricultural products, although some energy restrictions have been added in the past few months.

Russia's work is only going to get harder this year as Putin's government seeks to prevent a drop in oil revenues and ramps up spending on social programs at a time when the mobilization of hundreds of thousands of men is devastating the labor market.

The need for the US and its allies to maintain access to energy forced them to find a compromise, balancing punitive measures with their own interests.

Russia did produce more oil, and high commodity prices meant it earned enough to support its income by tapping into demand from countries like China and India.

The countries, which account for more than 30% of global GDP, maintained trade ties and refrained from condemning the invasion, allowing Russia to rebuild supply chains and fight economic isolation.

It will be recalled that in November it became known that 

the process of a deep recession had begun in Russia. 

After all, the volume of production there was reduced for two quarters in a row.

In addition, the situation in the economy worsens due to the announced mobilization.

In December , the deficit of the federal budget rose

to a record level in the Russian Federation  ,

which is associated with a drop in income against the background of restrictions on oil exports and the increase in expenses for the war against Ukraine.

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