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Economic and Political Overview

flag Russia Russia: Economic and Political Overview

In this page: Economic Outline | Political Outline | COVID-19 Country Response


Economic Outline

Economic Overview

On February 24th 2022, Russia initiated a military conflict on the Ukrainian territory, which profoundly upsets the current political context in both countries and will have substantial political and economic ramifications. For the ongoing updates on the developments of Russia-Ukraine conflict please consult the dedicated pages on BBC News.

The latest specific information on economic sanctions against Russia in response to the conflict in Ukraine is available below:
•    What sanctions are being imposed on Russia
•    The list of global sanctions on Russia for the war in Ukraine

For the latest updates on the key economic responses from governments to address the economic impact of the COVID-19 pandemic, please consult the IMF's policy tracking platform Policy Responses to COVID-19.

After a strong recovery from the COVID-19-induced recession, the Russian economy contracted again in 2022 (-3.4%), in the context of the war in Ukraine and the subsequent economic sanctions imposed by Western countries (IMF). The invasion of Ukraine by Russian military on February 24th 2022 prompted exceptionally harsh sanctions, including the freezing of central bank assets, aimed at pushing the Russian economy into a deep and lasting recession. According to IMF forecasts, the Russian economy should contract again in 2023 (-2.3%) before renewing with positive growth in 2024 (1.5%). High inflation negatively impacts private consumption, which is the traditional growth driver (Coface), and the exodus of foreign capital hits investment activity. Increasing economic isolation will weigh on long term growth potential (Focus Economics).

In 2022, the Russian economy was hit by the unprecedented number of sanctions imposed by Western countries. The stockmarket collapsed along with the rouble and both supply and demand dropped. Inflation soared to 13.8% in 2022 (from 6.7% in 2021). However, the Russian central bank reacted promptly, doubling interest rates, and managed to avoid a financial crisis (The Economist). According to IMF forecasts, inflation should decrease to 5% in 2023 and 4% in 2024, owing to softening demand. The Russian government introduced numerous economic policy measures to dampen the effect of sanctions and trade shocks on the domestic economy. Prime minister Mikhail Mishustin has estimated the overall financial impact of government support measures at more than USD 76 billion in 2022. Combined with increased social spending, total fiscal stimulus measures exceeded 6% of 2021 GDP (The Economist). After recording a balanced budget in 2021, Russia posted a budget deficit of -2.3% GDP in 2022, which is expected to persist in 2023 (-2.1% GDP) and 2024 (-1.2% GDP) according to IMF estimates. Public debt decreased to 16.2% GDP (from 17% GDP in 2021), and is expected to slightly increase to 16.9% GDP in 2023 before declining to 16.4% GDP in 2024 (IMF). Compared to other emerging markets, this is a relatively low ratio. In addition, Russia benefits from substantial savings in the National Wealth Fund. Limited restrictions on the sale of hydrocarbons allowed Russia to post a current-account surplus of over USD 220 billion, restraining Russia’s downturn (The Economist). The 2023 budget allocates a third of total spending to defence and security to support Russia’s military campaign in Ukraine (Reuters). Before the start of the war, the government’s key priorities were to manage the fluctuating COVID-19 pandemic evolution, as well as to achieve budgetary balance and stability. In addition, the government was pursuing the de-dollarization of the economy (Euler Hermes). Russia was already facing many challenges: a large state footprint, weak governance and institutions, insufficient infrastructure, low levels of competitiveness, underinvestment, low production capacity, dependence on raw materials, poor economic climate, lack of structural reforms and ageing of the population.
Social inequalities remain high, especially between large cities and rural areas. Only 1% of the population owns around 70% of private assets. Despite the emergence of an urban middle class, the poverty rate remains at around 13%. A middle class protest movement calls for an end to corruption and patronage. According to IMF estimates, the unemployment rate increased to 5.8% in 2020 under the effect of the pandemic, but decreased to 4% in 2022. It is forecast to slightly increase to 4.3% in 2023 and 4.4% in 2024 (IMF). The war in Ukraine darkened the outlook, with high inflation reducing the purchasing power.

Main Indicators 20222023 (E)2024 (E)2025 (E)2026 (E)
GDP (billions USD) 2,244.251,862.471,904.341,927.981,957.88
GDP (Constant Prices, Annual % Change) -
GDP per Capita (USD) 15,64613,00613,32413,52013,763
General Government Balance (in % of GDP) -1.1-3.8-2.7-1.5-0.8
General Government Gross Debt (in % of GDP) 18.921.221.821.720.9
Inflation Rate (%) n/a5.
Unemployment Rate (% of the Labour Force)
Current Account (billions USD) 236.0863.1475.7366.3465.78
Current Account (in % of GDP)

Source: IMF – World Economic Outlook Database, Latest data available.

Note : (E) Estimated data


Main Sectors of Industry

Russia has significant natural resources. It is the world's second largest producer of natural gas and the third largest producer of petroleum, but also one of the main producers and exporters of diamonds, nickel and platinum. In addition to the Russia-China and Russia-Turkey gas pipelines, a new gas pipeline to Germany was scheduled to start operating in 2022, but the launch was postponed due to Russia’s invasion of Ukraine. Despite its large area, Russia has relatively little arable land due to unfavourable climatic conditions. The country nevertheless owns 10% of the world's agricultural land and is one of the main exporters of cereals. The northern regions of the country focus mainly on livestock, while the southern regions and western Siberia produce cereals. Agriculture contributes 3.8% of the national GDP and employs around 6% of the total working population.
Industry accounts for 33.2% of Russia's GDP and employs 27% of the workforce. The country inherited most of the industrial bases of the Soviet Union. The most developed sectors are chemistry, metallurgy, mechanics, construction and defence. In response to economic sanctions from the United States and the EU, the government has implemented an import substitution policy that could boost domestic production.
The service sector employs 67% of the population and generates 52.9% of the GDP. Since the 1998 financial crisis, the banking sector has not undergone complete restructuring. Given the size of the country, the transport, communications and trade sectors are particularly important. Tourism is also becoming an important source of income.
After recovering from the COVID-19 pandemic in 2021, Russia’s economy was hit by the sanctions imposed by Western countries and the divestments that occurred following the invasion of Ukraine.

Breakdown of Economic Activity By Sector Agriculture Industry Services
Employment By Sector (in % of Total Employment) 5.8 26.9 67.3
Value Added (in % of GDP) 3.9 32.8 54.0
Value Added (Annual % Change) 6.7 -0.2 -2.3

Source: World Bank, Latest data available.


Find more information about your business sector on our service Market Reports.

Indicator of Economic Freedom


The Economic freedom index measure ten components of economic freedom, grouped into four broad categories or pillars of economic freedom: Rule of Law (property rights, freedom from corruption); Limited Government (fiscal freedom, government spending); Regulatory Efficiency (business freedom, labour freedom, monetary freedom); and Open Markets (trade freedom, investment freedom, financial freedom). Each of the freedoms within these four broad categories is individually scored on a scale of 0 to 100. A country’s overall economic freedom score is a simple average of its scores on the 10 individual freedoms.

World Rank:
Regional Rank:

Economic freedom in the world (interactive map)
Source: Index of Economic Freedom, Heritage Foundation


Business environment ranking


The business rankings model measures the quality or attractiveness of the business environment in the 82 countries covered by The Economist Intelligence Unit’s Country Forecast reports. It examines ten separate criteria or categories, covering the political environment, the macroeconomic environment, market opportunities, policy towards free enterprise and competition, policy towards foreign investment, foreign trade and exchange controls, taxes, financing, the labour market and infrastructure.

World Rank:

Source: The Economist Intelligence Unit - Business Environment Rankings 2021-2025


Country Risk

See the country risk analysis provided by Coface.


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Political Outline

Current Political Leaders
President: Vladimir Vladimirovich Putin (since 7 May 2012 ; re-elected on March 18th 2018) - United Russia
Prime Minister: Mikhail Mishustin (since 16 January 2020) - United Russia
Next Election Dates
Presidential: March 2024
State Duma: September 2026
Current Political Context
On February 24th 2022, Russia initiated a military conflict on the Ukrainian territory, which profoundly upsets the current political context in both countries and will have substantial political and economic ramifications. For the ongoing updates on the developments of Russia-Ukraine conflict please consult the dedicated pages on BBC News.

Vladimir Putin, who has been in power for 17 years, started a new six-year presidential term in May 2018. Continuing from his previous term, he emphasises conservative values, anti-Westernism and the nationalism of the great powers. In 2020, amid the COVID-19 pandemic, Putin called for a referendum that validated constitutional changes that allow him to seek re-election in 2024 and potentially remain in power until 2036. The September 2021 Duma elections, in which United Russia secured its constitutional majority, were tainted by fraud and preceded by a wave of repression. The main opposition figure Aleksei Navalnyi was jailed.

After an increasingly hostile rhetoric and prolonged military build-up in 2021, Russia invaded Ukraine on February 24th 2022. Western countries adopted an unprecedented range of sanctions aimed at pushing the Russian economy into a deep recession and isolating the country from the rest of the world. Major Asian states have signed up to export controls on semi-conductors, and at the 25 February UN Security Council vote condemning the invasion of Ukraine, China opted for abstention. As Ukrainian President Zelensky called on the population to defend their country, Russian forces faced an unexpected resistance. In Russia, demonstrations against the aggression were severely repressed, and accessed to social media was restricted. In 2022 the protracted war raised risks of global energy and food crisis, as existing deals were under increased pressure from Russia. In September, pipeline explosions signalled dangerous escalation, and Russia cut Nord Stream 1 gas flows indefinitely. Western allies ensured Ukraine of continuous support, providing humanitarian and financial aid, and sending weapons. As Russian forces were losing momentum on the battlefield, Putin ordered a partial mobilisation, stepped up attacks against Ukraine's critical infrastructure, and in January 2023, a new military commander, Valery Gerasimov, was appointed (The Economist). Sanctions pushed Russia to increase economic collaboration with its partners including Belarus, Iran, Turkey and China. Risks to domestic stability will increase as the war goes on and the economic and humanitarian costs mount.
Main Political Parties
In Russia, the powers of the executive were greatly increased by the adoption of a new constitution in 1993. The political apparatus is overwhelmingly in the hands of the United Russia party. While opposition parties are authorised, there is little chance for these parties to wield any real power. The main parties are:

-United Russia
: centrist, remains the largest and seemingly most popular party in Russia, self declared focus on 'Russian conservatism'
-Communist Party of the Russian Federation (CPRF): left-wing, seeks to establish modern socialism
-A Fair Russia (CP): centre-left, ally of United Russia
-Liberal Democratic Party of Russia (LDPR): far-right, opposes communism and capitalism, self described as centrist, an extreme right nationalist political party.
Type of State
Russia is a federal republic.
Executive Power
The President is the Head of State. He is elected by universal suffrage for six years. He is the commander-in-chief of the army and the real centre of power in the country. The Prime Minister is the Head of Government. He is appointed by the President, with the approval of the lower house of Parliament, and manages the everyday business of the country.
Legislative Power
Russia has a two-chamber legislative power. The Parliament, called the Federal Assembly, is composed of: the Council of the Federation (upper chamber), which has 170 seats and the members are appointed by the regional governors and legislative institutions, for a four-year term of office; and the State Douma (lower chamber), which has 450 seats; its members are elected by direct universal suffrage from partisan lists, for a four-year term.

Indicator of Freedom of the Press


The world rankings, published annually, measures violations of press freedom worldwide. It reflects the degree of freedom enjoyed by journalists, the media and digital citizens of each country and the means used by states to respect and uphold this freedom. Finally, a note and a position are assigned to each country. To compile this index, Reporters Without Borders (RWB) prepared a questionnaire incorporating the main criteria (44 in total) to assess the situation of press freedom in a given country. This questionnaire was sent to partner organisations,150 RWB correspondents, journalists, researchers, jurists and human rights activists. It includes every kind of direct attacks against journalists and digital citizens (murders, imprisonment, assault, threats, etc.) or against the media (censorship, confiscation, searches and harassment etc.).

World Rank:

Indicator of Political Freedom


The Indicator of Political Freedom provides an annual evaluation of the state of freedom in a country as experienced by individuals. The survey measures freedom according to two broad categories: political rights and civil liberties. The ratings process is based on a checklist of 10 political rights questions (on Electoral Process, Political Pluralism and Participation, Functioning of Government) and 15 civil liberties questions (on Freedom of Expression, Belief, Associational and Organizational Rights, Rule of Law, Personal Autonomy and Individual Rights). Scores are awarded to each of these questions on a scale of 0 to 4, where a score of 0 represents the smallest degree and 4 the greatest degree of rights or liberties present. The total score awarded to the political rights and civil liberties checklist determines the political rights and civil liberties rating. Each rating of 1 through 7, with 1 representing the highest and 7 the lowest level of freedom, corresponds to a range of total scores.

Not Free
Political Freedom:
Civil Liberties:

Political freedom in the world (interactive map)
Source: Freedom in the World Report, Freedom House


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COVID-19 Country Response

Travel restrictions
Regularly updated travel information for all countries with regards to Covid-19 related entry regulations, flight bans, test and vaccines requirements is available on TravelDoc Infopage.
To find information about the current travel regulations, including health requirements, it is also advised to consult Travel Regulations Map provided and updated on a daily basis by IATA.
Import & export restrictions
A general overview of trade restrictions which were adopted by different countries during the COVID-19 pandemic is available on the International Trade Centre's COVID-19 Temporary Trade Measures webpage.
Economic recovery plan
For the general overview of the key economic policy responses to the COVID-19 pandemic (fiscal, monetary and macroeconomic) undertaken by the government of Russia, please consult the country's dedicated section in the IMF’s Policy Tracker platform.
Support plan for businesses
For an evaluation of impact of the Covid pandemic on SMEs and an inventory of country responses to foster SME resilience, refer to the OECD's SME Covid-19 Policy Responses document.
You can also consult the World Bank's Map of SME-Support Measures in Response to COVID-19.


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Latest Update: November 2023