Atlantic Council: Why Russia’s economy is more resilient than you might think

2022-06-30 | Expert publications

By Josh Lipsky. Since Russia’s unprovoked invasion of Ukraine, the United States and Europe have deployed tools of economic warfare with the explicit goal of crippling the Russian economy and rendering the Kremlin unable to wage its war of aggression. The alacrity and scale of the Western response—which has included freezing Russia’s foreign-currency reserves, cutting off many Russian banks from the SWIFT payment system, and coordinating export controls—shook the foundations of the Russian economy.

But Russia has absorbed similar economic shocks before, and the last twenty-five years have shown that its economy can endure serious pain without destabilizing its political foundations. To put the stress in perspective, the estimated 4.5 percent contraction of Russia’s gross domestic product (GDP) in the three months since the invasion is similar to the early losses during the 2008 global financial crisis and the country’s 1998 financial crisis. And it pales in comparison to the shock from the COVID-19 pandemic in 2020.


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