Russian Banks, Economy Perform Better than Anticipated

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Facts

  • Despite sanctions imposed by Western nations in response to the war in Ukraine, Russian banks have reportedly rebounded by conducting internal business with the state, buoyed by the country’s growing defense budget and record corporate account surplus.1
  • Following the start of the war, Russia's banking sector initially saw a combined 1.5T ruble ($20B) first-half loss in 2022 but reportedly rebounded to a 203B ruble profit for the year.1
  • Meanwhile, internal and foreign entities alike predicted a double-digit contraction for Russia’s economy last year, with Russia’s Economic Ministry predicting a greater than 12% decrease in the gross domestic product (GDP) and the World Bank predicting an 11.2% contraction in April 2022.2
  • Instead, Russia’s economy reportedly only shrunk by 2.1% in 2022, largely attributed to the country’s oil market. While energy exports to Europe plummeted, countries like India and China bought the available oil, albeit at a discount.3
  • Russia’s statistics agency Rosstat published the data on Monday ahead of Pres. Vladimir Putin’s highly anticipated speech to parliament.  Some analysts, however, have questioned Rosstat’s figures.4
  • In his annual State of the Nation address, Putin said the West underestimated Russia’s economic strength and added that “the participation of the ruble” in Russia’s international transactions doubled compared to 2021. He also says that Russia and its partners are working towards a “safe system of international transactions” independent from Western currencies.5

Sources: 1Reuters, 2Al Jazeera, 3BBC News, 4The moscow times and 5Telesur english.

Narratives

  • Pro-Russia narrative, as provided by RT. Despite the entire Western world seeking to destroy Moscow and its economy, it stood strong and weathered the economic war. Western countries underestimated the strength of Russia, which is a fast-adapting nation that will not only endure but will also continue to innovate.
  • Anti-Russia narrative, as provided by Fortune. While its economy may have fared better than some estimates, Russia still faced a loss due to its war in Ukraine, which has been a complete disaster on a multitude of fronts. Since the war, Russia has become an economic afterthought, seeing over 1k global companies leave in addition to crippling oil sanctions that sunk its energy revenues. Despite claims to the contrary, Putin did irreparable damage to Russia’s economy.

Predictions