By Spy Uganda Correspondent
In the aftermath of Russia’s invasion of Ukraine, Western leaders heralded a sanctions regime that would cripple the country’s war machine.
Joe Biden claimed Russia’s economy would be “cut in half”, while Boris Johnson spoke of squeezing it “piece by piece.”
A year has passed, but that great promise has been slow to deliver.
“The Russian economy and system of government have turned out to be much stronger than the West believed,” President Vladimir Putin said in a speech to the country’s parliament on Tuesday.
He was also flexing his muscles at an economic cabinet meeting last month: “Remember, some of our experts here in the country – I’m not even talking about Western experts – thought [gross domestic product] would fall by 10%, 15%, even 20%.”
Instead, Russia shrunk by a relatively modest 2.2% and it is expected to grow by 0.3% this year, according to the International Monetary Fund.
It means the sanctions-hit country will outperform Britain.
Among Western leaders, these predictions will make for unpleasant reading.
Over the past year, sanctions have descended on Russia’s economy but, to the surprise of most economists, it has weathered the storm.
This is largely down to the country’s oil and gas reserves. Although Europe turned its back on Russian energy exports, the country was able to exploit delays in imposing the ban, which helped bolster its public finances.
Revenues held up strongly thanks to a global spike in energy prices and a successful reorientation of trade to China and India.
Record high trade surpluses following the invasion came after years of conservative fiscal policies which allowed the country to amass a fund that it is now deploying in the war against Ukraine.
The country has been quietly sanctions-proofing its economy for years.
Russians are enjoying record-low unemployment and wage growth that has helped them to weather the worst of rising inflation.
They’re still cautious about spending during times of economic uncertainty, but the government is trying its best to encourage them by hiking minimum wages and pensions.
While economic data is not wholly reliable, nor does it provide a full view of the strains Russian society is under, the domestic economy has not collapsed in the way some had warned.
