While Russia has emerged as one of the very few winners from the recent disruptions to the global oil market amid the Iran war, this is not enough to offset the hit of sanctions and isolation, the managing director of the International Monetary Fund (IMF) told Euronews.
After two years of strong performance driven by a shift to a war economy, Russia’s economic situation is weakening, IMF Managing Director Kristalina Georgieva told Euronews.
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And although the IMF raised its forecast for Russia’s 2026 growth in its April outlook from 0.8% to 1.1%, Georgieva told Euronews this did not reflect the full picture of the economic weakening.
“The higher oil prices do give a breather to Russia,” Georgieva said, arguing the hike cannot offset the bigger hit to Russia’s economy.
“They have depleted their buffers dramatically,” Georgieva said. The oil price windfall “appears to be used to rebuild buffers rather than to inject more investment into the economy," she explained.
“Growth has slowed down significantly. Now we are projecting 1%. Before the war, their potential growth was 1.6%," Georgieva pointed out.
The IMF managing director also told Euronews that it is important to consider other economic indicators to better understand Russia's current economic situation.
“Inflation is high. That means that interest rates are high, almost 15%.”
The IMF does not expect to see “material impact on growth in Russia," Georgieva said. “It is a country whose medium (and) long-term prospects have worsened significantly.”
She listed three grounds on which the prospects have worsened. The first is losing people.
“A country that was in a demographic decline to begin with now lost so many young people for a terrible reason," Georgieva explained.
The second factor is the sanctions, specifically the way they “bite a lot on the technology front.”
“What we see in the oil and gas sector in Russia, there is a tremendous problem with lack of technological renewal that is restricting the ability of the sector to expand," she said.
And the third is the fact that “Russia lost standing.”
“That translates into many tangible and non-tangible losses. I mean, just think of the young Russians that could have built relations with Europeans and others and did not because of the war," Georgieva stated.
"So, on the whole, Russia is coming crippled," she concluded.