Economy of Russia - statistics & facts
The 11th-largest economy in the world, Russia was positioned between Canada and Mexico in the global ranking by gross domestic product (GDP) in 2024. At approximately 14,400 U.S. dollars, the average wealth per capita in Russia was lower than in other European countries. Furthermore, inequality was observed in the society, as around 46 percent of the total income was accumulated by the richest 20 percent, compared to 5.5 percent by the poorest one-fifth.
The economy has shifted toward defense manufacturing and financing the Armed Forces of Russia since 2022, with the federal budget spending on national defense planned for 2024. As Russia increased production of weapons and other war-related goods, the manufacturing output followed a positive trend, which has benefitted the economy.
Russia's economy is expected to expand at a moderate pace in the following years, despite the Western sanctions. The reasons behind the forecast growth are increased commodity prices, strengthened trade relations with non-sanctioning countries, and development of domestic production capabilities.
The impact of the war in Ukraine on the Russian economy
As a consequence of the Russian invasion of Ukraine that started in February 2022, the Russian economy shrank by 1.2 percent in that year. The sanctions imposed by Western countries on Russia have led to disruptions to trade flows of Russia's key export and import commodities, such as fossil fuels, technology, and equipment. Thus, the country's economic sectors had to prioritize import substitution and explore other trade partners. For example, import dependence in retail and telecommunications has created additional risks to these industries' resilience. However, the Russian economy has remained relatively stable in the face of restrictions and was expected to grow in 2023 and 2024. The sanctions have also affected consumer prices, and even though the inflation rate forecast for 2024 was below 2022 levels, it remained high at almost seven percent.The economy has shifted toward defense manufacturing and financing the Armed Forces of Russia since 2022, with the federal budget spending on national defense planned for 2024. As Russia increased production of weapons and other war-related goods, the manufacturing output followed a positive trend, which has benefitted the economy.
Energy sector is crucial to the Russian economy
With the largest natural resources value worldwide, Russia is highly dependent on its energy industry. The country is among the leading oil, gas, coal, and steel producers. Furthermore, earnings from foreign sales of energy commodities are a major contributor to Russia's federal budget, as mineral products occupied over 60 percent of the total exports. Therefore, energy import bans from Russia were included in sanction packages of several Western countries due to the war in Ukraine. For example, the United States prohibited imports of oil, liquefied natural gas (LNG), and coal from Russia, while the EU banned Russian coal and seaborne oil shipments. Thus, Russia redirected its fossil fuel shipments to China, India, and Turkey.Russia's economy is expected to expand at a moderate pace in the following years, despite the Western sanctions. The reasons behind the forecast growth are increased commodity prices, strengthened trade relations with non-sanctioning countries, and development of domestic production capabilities.
