Russia’s economy shrank by 0.4% in the first six months of 2022, compared to the same period last year, with capital investment – one of the main drivers of economic growth – increasing by 7.8%, according to with the data announced by the country’s federal statistical agency Rosstat on Wednesday.
Russia’s export-dependent economy is slowly sinking into recession under the weight of sweeping Western sanctions against Moscow over its invasion of Ukraine, which the Kremlin calls a “special military operation.” However, the economic blow to Russian economy is so far not as strong as initially expected, as reported by Reuters.
Russia’s economy is expected to shrink by less than 3 percent this year as a whole, a top government official said this week. His estimate contrasts with an earlier forecast by Russia’s finance ministry that warned of a recession of more than 12 percent – which would be the biggest since the crisis-induced recession of the mid-1990s, following the collapse of the Soviet Union.
However, as mentioned above, capital investments saw a significant increase of 7.8% in the first half of the year. More specifically, in the second quarter, capital investment increased by 4.1% year-on-year, while it was preceded by a 12.8% increase in the first three months of 2022, according to Rosstat data. Most of the increase in the first half of the year came from the mining and manufacturing sectors.
Source: Capital
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