Russia’s Federal State Statistics Service will release preliminary first quarter data on GDP growth today. The Russian economy is expected
Russia’s Federal State Statistics Service will release preliminary first quarter data on GDP growth today.
The Russian economy is expected to have contracted from 2.1% to 1.8% growth between this quarter and the last, a result of a drop in oil prices and the early effects of the COVID-19 pandemic.
Over the past two weeks Russia has seen a surge in cases, with over 282,000 total cases reported and more than 2,500 deaths. Despite this, Russian President Vladimir Putin has been easing lockdown restrictions on the country as the economic damage continues to mount—Russia’s economic activity has shrunk by a third and bankruptcies have surged 70%.
The economic devastation wrought by measures to contain the virus will serve as yet another reminder to Moscow that Russia is overly dependent on its oil and gas exports. While a “rainy day fund” of more than $550 billion in oil sales will preserve the industry, the current crisis poses an existential threat to small and midsize businesses. A hard blow to other sectors of Russia’s economy will only make diversification more difficult in the long term, while posing a political threat to Putin’s regime, should a sense of economic abandonment manifest itself in a future dissident movement.
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