WASHINGTON, April 28. /TASS/. Russia’s economy has proven to be more resilient to sanctions than projected, the International Monetary Fund (IMF) said in its Regional Economic Report on Europe’s economy released on Friday.

"Russia’s economy has so far proven to be more resilient to sanctions than many observers initially expected. After a sharp drop in the second quarter of last year, the economy bounced back strongly in the third and fourth quarters, limiting the 2022 drop in output to 2.1%," the IMF said, adding that Russia’s GDP growth is projected at 0.7% for 2023.

"A large improvement in the terms of trade and resilient oil export volumes in the course drove oil and gas revenues to record highs and supported the economy in 2022. Russia’s ability to redirect crude exports from sanctioning to non-sanctioning countries is confirmed by independent, nonofficial data, while gas export revenues were also high despite the sharp drop in volumes," the Fund’s analysts said.

However, IMF staff forecasts show "a sharp decline in fiscal revenues in 2023, mainly as a result of lower oil and gas prices," according to the report. On December 5, 2022, the European Union’s crude oil import ban and a price cap of $60 per barrel on exports to third countries came into effect, followed on February 5, 2023, by an additional import ban and price cap on oil products, the Fund noted. "While it is too early to assess the impact of the sanctions on oil products, the price cap on crude has not led to a decline in Russian oil volumes so far, but it has increased the price discount," the report said.

"Staff have revised down substantially the estimate of potential growth in the Russian economy, to less than 1% per year. This reflects, among other factors, the isolation triggered by trade and financial sanctions, curtailed access to advanced technology and know-how, and a substantial loss in human capital. As a result, Russia’s output in 2027 is projected to be about 8% lower than forecasted prior to Russia’s invasion of Ukraine. Such low potential growth would also mean that Russia’s per capita income levels would no longer converge toward those of richer countries and could even fall further behind," the IMF said.