The Economist: 'Why the Russian economy keeps beating expectations'

I didn't believe the Yale University report that said that the Russian economy was reeling because of sanctions. My perhaps unfair reason was that it came from Yale. So little credibility do Ivy League universities have, in my eyes. 

The Economist has now published an article contradicting the report.

But the Economist’s analysis of data from a wide variety of sources suggests that Russia’s economy is doing better than even the most upbeat forecasts predicted, as sales of hydrocarbons have fuelled a record current-account surplus. Take, for example, a “current-activity indicator” published by Goldman Sachs, a bank, a real-time measure of economic growth (see chart 1). This declined dramatically in March and April, if not on a scale comparable with the global financial crisis of 2007-09 or even the invasion of Ukraine in 2014. In subsequent months it has recovered.

Other measures tell a similar story: of a recession, but not a deep one, at least by Russia’s volatile standards (see chart 2). In June industrial production was 1.8% down on a year earlier, according to a paper published by JPMorgan Chase, another bank. An index of service-sector growth, compiled by sending surveys to managers, shows a smaller hit than during previous crises. Electricity consumption seems to be growing again, after an initial decline. The number of railway loadings, a proxy for goods demand, is holding up.

Meanwhile, inflation is easing. From the start of 2022 to the end of May consumer prices rose by about 10%. The fall in the rouble made imports dearer; the withdrawal of Western companies cut supply. But prices are now falling, according to Rosstat. An independent source, published by State Street Global Markets, a consultancy, and PriceStats, a data firm, derived from online prices, shows similar trends. In its public statements, the cbr now worries about falling prices as well as inflation.

Veteran Canadian Moscow correspondent Fred Weir said:

I definitely did not expect to be reporting little visible change on the ground in Russian life, six months after the most sustained and intensive waves of international sanctions in history hammered this country. But here we are. 

(He also said in an interview last week (12.30) that the Russian troops at the moment seem to be winning very slowly.)