Russia's economy continues to struggle as sanctions and the ongoing war with Ukraine take a toll on the country's energy revenues and currency. In the first quarter of 2023, Russia's energy revenues dropped 45% year-over-year to $19.6 billion, and spending surged 34% to $99 billion. This led to a $29 billion budget deficit, reversing sharply from a year-ago surplus of $14 billion. Alongside the drop in energy revenue, the ruble had its worst week against the dollar since April 2022, falling more than 5% by Friday.
Experts had previously predicted that sanctions targeting Russian energy would not have a significant impact on production volume, but seaborne exports collapsed in the first week of April, with flows from Russian ports dropping by 1.24 million barrels a day – the steepest weekly decline since mid-December.
A recent paper from the Centre for Economic Policy and Research suggests that Russia's recession in 2022 was twice as bad as official data implied. Stripping away military spending from GDP figures, the country saw a downturn twice as bad as domestic figures suggest. This, coupled with stagnating real estate prices and lower business activity, points to a further loss of momentum in the Russian economy that is not yet fully reflected in official data releases.
Economist Konstantin Sonin has stated that Russia faces the same fate as the Soviet Union, with the current situation making the Russian economy more primitive and backwards. "This makes backwardness and primitivism more persistent," he told Russian news outlet Novaya Gazeta.
Overall, the situation in Russia remains bleak, with sanctions and the war with Ukraine weighing on the country's long-term prospects.