Russia’s economy is holding up better than expected amid sweeping sanctions over its invasion of Ukraine, according to the International Monetary Fund’s World Economic Outlook report issued on Tuesday.
The IMF slashed growth forecasts for almost every country, but upgraded Russia’s economic forecast — with the country’s economy still contracting, but by 6% — an improvement from the IMF’s April forecast of an 8.5% contraction.
That’s because Russia’s crude-oil and non-energy exports have been “holding up better than expected,” the IMF wrote in its report. “In addition, domestic demand is also showing some resilience thanks to containment of the effect of the sanctions on the domestic financial sector and a lower-than-anticipated weakening of the labor market,” added the IMF.
Europe's growth is weighed down by the possibility of a Russian natural-gas supply halt as countries in the region are heavily dependent on the fuel import. GDP growth for the euro-zone is expected to slow to 2.6% this year, down from 5.4% in 2021.
The US economy is also slowing sharply, with growth expected to reach 2.3% this year, down from 5.7% in 2021.
"The world may soon be teetering on the edge of a global recession, only two years after the last one," said Gourinchas.