Our Thoughts On the Russian Economy

The Russian economy, on many levels, is in fine form. Economic growth has consistently been stronger than expected over the last year or so. The IMF sees GDP growth running at 3.2% in 2024. In the second quarter of the year, growth was as fast as 3.8% year-on-year. Headline inflation is high, at 8.9%, but core inflation is much lower, at just over 1%. The central bank is well run by Elvira Nabiullina. Government debt is low, net foreign assets are in substantial surplus.

Russia is regarded as an emerging G20 country but it (just) achieved World Bank high income status in 2024.

Russia edged into high income status in 2024, to a large degree because of higher military spending.

But, of course, Russia is still far from being rehabilitated in the world economy. If that were to change, especially if a peace agreement with Ukraine could be achieved and sanctions lifted, the world would be a less risky place.