Russia's economy rolls back 4 years due to the war - Bloomberg

Bloomberg shared the statement.

The publication reports that the economy that was picking up speed at the start of 2022 swung into a contraction during the second quarter.

The agency polled 12 analysts and forecast gross domestic product to contract for the first time in a year, falling 4.7% for the year.

"The economy will shed four years of growth, returning to its 2018 size in the second quarter. We expect the contraction to slow into the fourth quarter with looser monetary policy supporting demand. Still the economy will lose another 2% in 2023 as the European energy ban will depress export." said Russian economist Alexander Isakov.

The jolt of international sanctions over the war disrupted trade and threw industries like car manufacturing into paralysis while consumer spending seized up. Although the economy’s decline so far isn’t as precipitous as first anticipated, the central bank projects the slump will worsen in the quarters ahead and doesn’t expect a recovery until the second half of next year.

“The crisis is moving along a very smooth trajectory,” said Evgeny Suvorov, lead Russia economist at CentroCredit Bank. “The economy will reach its low point by mid-2023 at best.” said Yevgeny Suvorov, an economist at Russia's CentroCredit Bank.

The Bank of Russia predicts that GDP will shrink by 7% this quarter and possibly even more in the final three months of the year. According to his estimates, the economy shrank by 4.3% in the second quarter.

The standoff over energy shipments to Europe raises new risks for the economy. Monthly declines in oil output will start as soon as in August, according to the International Energy Agency, which predicts Russia’s crude production will decline about 20% by the start of next year.