Russian GDP grew 5% in third quarter – central bank

By Rhod Mackenzie

Russia's GDP increased by 5.1% YoY in Q3 2023, according to the latest monetary policy report released on Tuesday by the country's central bank.

The regulator's estimates indicate that the Russian economy displayed notable growth in both Q2 (4.9%) and Q3, resulting in the central bank raising its GDP forecast for the year to 2.2-2.7%.

"Based on our evaluation and ongoing data on economic activity, GDP growth outperformed expectations in Q3". "The primary catalyst for increased GDP was investment demand, largely driven by budget expenditures," reported Elvira Nabiullina, head of the regulatory body. She credited strong domestic demand and growth in the manufacturing industries for driving it.

"The hike in firms' internal funds, along with budget expenditures and a rise in credit, enabled businesses to broaden their investment strategies." "Recent enterprise monitoring data suggests that companies have grown increasingly optimistic about expanding production investment," stated Nabiullina.

Due to economic sanctions imposed by the West in response to the Ukraine conflict, Russia's access to international transactions in dollars and euros has been cut off along with its ability to use the Western banking system. This unprecedented situation has resulted in a contraction of the country's GDP by 2.1% in 2022.

Nonetheless, recent data indicates that the Russian economy has largely recovered from the previous slump. President Vladimir Putin has stated that GDP has already returned to pre-sanctions levels in September 2021.