Putin’s war sets Russian economy back 4 years in single quarter

A wave of international sanctions after Moscow’s invasion of Ukraine disrupted Russia’s trade and threw various of its industries into paralysis.

By Bloomberg NewsBloomberg

Published On 12 Aug 202212 Aug 2022

President Vladimir Putin’s invasion of Ukraine set Russia’s economy back four years in the first full quarter after the attack, putting it on track for one of the longest downturns on record even if less sharply than initially feared.

In a bleak tally of the war for Russia, an economy that was picking up speed at the start of 2022 swung into a contraction during the second quarter. Data on Friday showed gross domestic product shrank for the first time in over a year but fared better than forecast, dropping an annual 4%.

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Considering the lost output, GDP is now roughly equivalent to its size in 2018, according to Bloomberg Economics.

The jolt of international sanctions over the war disrupted trade and threw industries like car manufacturing into paralysis while consumer spending seized up. Although the economy’s decline so far isn’t as precipitous as first anticipated, the central bank projects the slump will worsen in the quarters ahead, reaching its lowest point in the first half of next year.

“The economy will move toward a new long-term equilibrium,” Bank of Russia Deputy Governor Alexey Zabotkin said at a briefing in Moscow. “As the economy undergoes a restructuring, its growth will resume.”