Russia's war economy faces tough times ahead, says IMF's Georgieva
Reuters
Published Feb 12, 2024 08:52AM ET
(Reuters) - Russia's war economy is in for tough times due to the outflow of people and shortages of technology, the International Monetary Fund's managing director Kristalina Georgieva said on Monday, even as high military spending boosts economic growth.
The economy rebounded sharply from a slump in 2022, annual data showed last week, but the growth relies heavily on state-funded arms and ammunition production and masks problems that are hampering an improvement in Russians' living standards.
Georgieva, speaking to CNBC, said the IMF's forecast of 2.6% gross domestic product (GDP) for Russia this year was a sign that the Russian state, which built up sizeable buffers over many years of fiscal discipline, was investing in the war economy.
Today in Russia, military production goes up and consumption goes down, she said.
"That is pretty much what the Soviet Union used to look like - high level of production, low level of consumption," she said.
Russia's economy grew 3.6% in 2023 after a revised 1.2% contraction in 2022.
Russia-based economists have highlighted the poor quality of economic growth, pointing out that missiles and shells may contribute to higher GDP but offer limited benefit to the population.
"I actually think the Russian economy is (in) for very tough times because of the outflow of people and because of the reduced access to technology that comes with the sanctions," Georgieva said.
"So although this (2.6%) number looks like a good number, there is a bigger story behind (it) and it's not a very good story."
Get The News You Want
Written By: Reuters
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.