3 Factors Russia’s Economy Remains Resilient Despite Western Sanctions

JAKARTA – There are a number of factors that make Russia’s economy remain resilient despite being bombarded by sanctions from Western countries. One of them relates to Moscow’s tactics in turning towards Eastern allies.

Since its military operation into Ukraine, Russia has been bombarded with sanctions by Western countries. However, efforts by the United States (US) and its allies to pressure Moscow economically seem to be fruitless. Instead of faltering, the Russian economy is running well and is even growing better than the US and many European countries.

For example, Head of the IMF’s European Department, Alfred Kammer, predicts that the Russian economy will continue to grow in 2024. According to him, Moscow has enjoyed a rebound in consumption, real wage growth and a strong labor market.

Furthermore, what are the actual factors that make Russia’s economy remain resilient despite being bombarded by Western sanctions?

Russian Economic Factors Remain Resilient Despite Western Sanctions

1. Oil Exports

Despite a series of sanctions imposed by the West, Russia remains one of the world’s largest oil exporters. They also enjoyed the benefits of Saudi Arabia’s decision to previously reduce its crude oil exports.

On the one hand, US President Joe Biden has indeed designed a price limitation mechanism to withdraw Russian oil from the international market. However, the unpleasant reality is that Moscow has definitely learned to circumvent such restrictions.

For example, Russia built a ‘shadow’ tanker fleet to avoid oil price restrictions. This has been done since the beginning of the implementation of sanctions for the invasion of Ukraine.

Quoting the Carnegie Endowment page, Wednesday (8/5/2024), the Russian Ministry of Finance even estimates that in 2024 oil and gas revenues will increase to 11.5 trillion rubles (USD 124 billion). That figure is about 30% higher than the previous year.

2. Move to the Eastern Allies

Before the fall of Western sanctions, Russia had been moving towards the East to increase economic growth. President Vladimir Putin in this case found trade and investment partners who seemed unaffected by the threat of sanctions.

One of the countries referred to above is China. Quoting EuroNews, Russia continues to consolidate its financial and energy markets towards Eastern allies such as Beijing.