The Russian economy outperformed expectations in 2023, according to the latest report by the World Bank, which estimates the country grew at 2.6% for the year. This is an upward revision from the previous projection of 1.6% growth.
According to the publication issued on Tuesday, the stronger-than-expected recovery was fueled by substantial fiscal support, including additional military spending.
The World Bank projects that Russia’s economy will grow by 1.3% in 2024 and 0.9% in 2025, adding that tightening monetary policy is expected to dampen domestic demand. “Trade diversion to China, India, and Türkiye is evident for both exports and imports,” the World Bank wrote. “Capacity constraints, including tight labor market conditions and scarcity of domestic labor will continue to restrict growth.”
The head of the Russian central bank, Elvira Nabiullina, said last month that the country’s GDP is expected to have grown by around 2.7% in 2023, driven by strong domestic demand. For 2024, the central bank is projecting growth of 0.5% to 1.5%. This estimate, however, will be reviewed in February, Nabiullina said, adding that it is important to make “timely decisions” to cool excess demand and reduce inflation.
President Vladimir Putin praised the country’s performance during his annual address in December, claiming the economy has shown strength and stability in the face of outside pressure.
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