The growth of the Russian economy, despite Western sanctions, suggests that it has proven to be surprisingly resilient, but there is little good in this growth. This opinion was expressed by IMF Director Kristalina Georgieva in an interview with CNBC.
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At the end of January, the International Monetary Fund more than doubled its forecast for Russia’s economic growth rate this year, increasing it from 1.1% in October to 2.6%.
However, Georgieva emphasized that Russia is facing significant difficulties.
“This is a war economy. If you look at Russia, today production is growing, mainly for military purposes, consumption is falling. This is roughly what the Soviet Union looked like,” Georgieva noted.
Russia’s defense spending has grown rapidly since the start of the war. Last November, Putin approved a state budget that increased military spending to about 30%, representing almost 70% growth from 2023 to 2024.
According to a Reuters analysis, defense and security spending this year will amount to about 40% of Russia's total budget expenditures.
However, at the same time, more than 800 thousand people left Russia, according to estimates of scientists in exile collected last October. Among those who fled are many highly skilled workers in fields such as IT and science.
“I really believe that the Russian economy is facing very difficult times due to the outflow of people and the limited access to technology that comes with sanctions,” Georgieva said.
She also added that although “the numbers look positive, there is not a very good story behind them.”