BERLIN (Reuters) – Russia’s economy is unlikely to return to pre-war levels before the end of this decade, as the Ukraine war and tougher sanctions have exacerbated long-term economic shortcomings, ScopeRatings said in a report seen by Reuters on Friday.
By the end of 2023, gross domestic product (GDP) will be about 8% lower than it was in 2021, according to projections by the credit rating watchdog.
The Russian economy expanded by 4.7% in 2021, according to the Federal Statistics Service Rosstat.
The agency said that after 2023, potential growth will decline to 1.0-1.5% annually from the 1.5-2.0% achieved before the war.
“The Russian government, with the help of the Bank of Russia, used unexpected export earnings to mitigate the direct domestic economic impact of the war in Ukraine and sanctions, but the long-term outlook has worsened,” said Scope analyst Levon Kamrian.
According to the report, accelerating capital outflows, limited access to Western technology, and negative demographic trends will continue to hamper growth and complicate the effects of war and sanctions in the absence of any significant economic restructuring.
The report stated that nearly four times the flow of private capital – $64.2 billion – from Russia in the first quarter of 2022 alone compared to the same quarter last year.
The Scope report expects the private sector to withdraw more capital from Russia this year than the $152 billion it pulled in 2014, when Russia annexed Crimea.