Russia-Ukraine war: Russia doing better than expected despite sanctions

Notwithstanding damaging economic financials imposed on Russia by the West directly following the invasion of Ukraine, Russia's economy seems, by all accounts, to be doing better than expected as it benefits from high energy costs, the International Monetary Fund (IMF) has said.

The economic sanctions were intended to remove Russia from the global financial system and interfere with reserves accessible to Moscow to finance the war.

Yet, the International Monetary Fund's most recent World Economic Outlook upgraded Russia's GDP gauge for 2022 by an exceptional 2.5 percentage points, in spite of the fact that its economy is as yet expected to shrink by 6%.

While major economies including the United States and China are slowing, "Russia's economy is estimated to have contracted during the second quarter by less than previously projected, with crude oil and non-energy exports holding up better than expected," the report said.

In the wake of the new year below $80 a barrel, oil costs spiked to almost $129 in March, prior to moving back to somewhat more than $105, while natural gas costs are rising once more and moving toward their new peak.

In the mean time, in spite of the approvals, Russia's "domestic demand is also showing some resilience thanks to containment of the effect of the sanctions."

The IMF added that Europe is facing the brunt of the fallout given its reliance on Russia for energy, and the situation could worsen dramatically if Moscow cuts off gas exports, and once the European Union imposes a ban on Russian oil delivered by sea starting next year.