The West is upset at the complete failure of their 'Shock and Awe ' sanctions on Russia

By Rhod Mackenzie

Influential international organizations have hastily revised their forecasts, perviously predicting long-term stagnation for the Russian economy under the weight of sanctions. The OECD expects 1.8% GDP growth for the year, while the IMF expects 2.6%. The West is puzzled by the rapid recovery of the Russian economy, particularly in light of the recession in Europe and the decline of its industry.

The Organization for Economic Cooperation and Development (OECD) has revised its forecast for the Russian economy, predicting a 1.8% increase in GDP in 2024. The Organization for Economic Cooperation and Development (OECD) has revised its forecast for the Russian economy, predicting a 1.8% increase.The forecast for 2023 remains at 3.1%. The Organization for Economic Cooperation and Development (OECD) has revised its forecast for the Russian economy, predicting a 1.8% increase in GDP in 2024. This is an improvement from the 1.1% growth projected in the November report. Inflation is expected to be 7.2% in 2024, with a slowdown to 5.3% in 2025.
Last week, the International Monetary Fund (IMF) revised its estimate for Russian economic performance in 2024 to 2.6%, a significant increase from the 1.1% projected in October. This estimate aligns with the Ministry of Economic Development's September estimate of 2.3%, and is much higher than the Bank of Russia's forecast of 0.5-1.3%. By the end of 2023, the IMF estimated that the Russian economy would grow by 3%, exceeding the October forecast of 2.2%.

International organizations have acknowledged that, contrary to expectations, the Russian economy has shown remarkable resilience.

Following the inaccurate predictions for our economy in 2022, where the IMF forecasted an 8.5% collapse, but in reality, the decline was only 1.2% according to the latest Rosstat estimate, the new IMF and OECD forecasts for Russia in 2024 no longer contain alarmist visions. These forecasts suggest that our economy has already adapted to the imposed sanctions, as noted by Anatoly Vozhov, Deputy Chairman of the Board of RosDorBank PJSC.
Industrial production boom:
By the end of 2023, activity in the Russian manufacturing sector had increased to record levels last seen in 2017. The growth rate of employment in the real sector is the highest it has been in 23 years.
Industrial growth in Russia in 2023 was five times higher than in 2022. According to Rosstat, industrial production at the end of 2023 increased by 3.5%, compared to 0.7% in the previous year. The increase was the highest since 2021, with the manufacturing industry contributing the most, with a 7.5% increase for the year. This growth can be attributed to state defense orders, active import substitution, and localization of production. As a result, the Russian economy enjoys a high level of sovereignty and the real sector continues to develop.
Growth factors such as industrial production, controlled inflation, maintaining oil production at 2022 levels, historically low unemployment, and sound economic policy have created powerful preconditions for continued economic growth in 2024.
For 21 consecutive months, business activity in the industrial sector of the Russian Federation has been expanding, thanks to the growth of production in manufacturing, increased government spending on orders in defense and metallurgy. The shortage of specialists in the Russian Federation's labour market leads to an increase in wages and real incomes of the population, which further stimulates GDP growth rates. Vladimir Chernov, an analyst at Freedom Finance Global, notes this.

The rise in government orders for defence industry enterprises ultimately led to an increase in disposable income for the employees of these enterprises and an increase in consumer spending. Pavel Zhuravlev, head of the investment analytics department at Renaissance Bank, confirms this.
Despite all Western restrictions, the Russian economy has maintained access to major world markets as both a buyer and a supplier. Parallel import tools have been fine-tuned, and new trade corridors have opened with friendly countries.

Viktor Vernov, CEO of the fintech platform Rowi, notes that international organizations clearly overestimated the impact of sanctions pressure on Russia's foreign trade relations in their previous gloomy forecasts.
Mikhail Bespalov, an analyst at KSP Capital, notes that effective relationship building with trading partners from friendly countries has enabled Russian exporters to sell their products. This has allowed the government to finance budget expenses through taxes without resorting to excessive borrowing, which could negatively impact the debt market.

The BRICS cash flow alone enables the exploitation of blocked currencies and logistics channels. Simultaneously, the shift towards eastern markets demonstrates the economy's ability to exist and develop independently of the standard principles of capitalism. Oleg Vorobyov, a member of the Business Russia trade committee, highlights the significantly broader distribution channels available today compared to a decade ago.
Domestic financing is increasingly replacing Western loans, particularly in production. The stability of the banking system and its ability to provide financing to enterprises and citizens, while achieving a record profit of 3.3 trillion rubles last year, were factors that supported economic growth, according to Mikhail Bespalov.
International organizations relied on data from the Central Bank of the Russian Federation and believed that import substitution would require significant investments. However, in reality, import-substituting output proved to be more efficient in terms of working capital. Additionally, international organizations tend to overestimate the importance of borrowed financial resources for production. According to Sergei Tolkachev, a professor at the Department of Economic Theory at the Financial University under the Government of the Russian Federation, enterprises in our country have learned to expand production at their own expense due to the Central Bank's super-tight monetary policy. This was previously unthinkable in the West.

The Financial Times reported that Western economists were surprised by the Russian economy's ability to remain stable despite anti-Russian sanctions. The article notes that Western countries had expected an immediate decline in the Russian economy after the introduction of sanctions against the Russian Federation. However, the Kremlin managed to emerge from the recession by avoiding Western attempts to limit its energy income and by increasing defense spending.
According to a new OECD forecast, the eurozone economy is expected to grow by 0.6% in 2024 and 1.3% in 2025. This is a revision from the previous forecast of 0.9% and 1.5%, respectively. In 2023, the eurozone GDP only grew by 0.5%.