Kristalina Georgieva, Managing Director of the International Monetary Fund, during a press conference at the International Monetary Fund headquarters on April 14, 2023.
Kevin Dickey | Getty Images News | Getty Images
DUBAI, United Arab Emirates — The head of the International Monetary Fund has warned that the Russian economy still faces significant headwinds despite the Washington-based institution’s recent growth rating upgrade.
In the nearly two years since Russia launched its full-scale invasion of Ukraine, the Russian economy has shown amazing resilience amid the wave of Western sanctions.
In late January, the International Monetary Fund more than doubled its forecast for the country’s economic growth rate this year, from 1.1% in October to 2.6%.
Still, International Monetary Fund Managing Director Kristalina Georgieva predicted more trouble for the country of about 145 million people.
In an interview with CNBC’s Dan Murphy at the World Government Summit in Dubai, Georgieva described what she believes is driving Russia’s economic growth and why forecasts don’t tell the full story.
“What it tells us is that this is a wartime economy in which the country – let’s remember, built up very large buffers over years of fiscal discipline – is investing in this wartime economy. The economy. If you look at Russia today, production is up, (for) the military, (and) consumption is down. That’s pretty much what the Soviet Union used to be. High levels of production, low levels of consumption.”
Russian defense spending has surged since the war began. In November last year, Russian President Vladimir Putin approved the national budget Military spending as a proportion of fiscal spending has increased to about 30%, an increase of nearly 70% from 2023 to 2024.
Analysts say defense and security spending is expected to account for about 40% of Russia’s total budget spending this year. Reuters.
However, at the same time, more than 800,000 people have left Russia, It is estimated Compiled by exiled scholars last October. Many of those who fled were highly skilled workers in fields such as information technology and science.
“I actually think the Russian economy is going through a very difficult time because of the outflow of people and the reduced access to technology that comes with sanctions,” Georgieva said.
“So while that number looks good, there’s a bigger story behind it, and it’s not a very good story.”
