An unexpected adversary on India’s journey to become the world’s third largest economy by 2030? According to a report released by the World Bank last August, in terms of purchasing power parity based on GDP, Russia has overtaken Japan as the world’s fourth economic power by 2021. According to Finshott’s report, it has remained the same ever since.
How can Russia do this despite Western sanctions? Western countries imposed sanctions on Russia after the war in Ukraine. Russia also had to find the funds for it during the war. But Russian GDP grew by three percent last year, defying all predictions of a contraction. How did it happen despite so many adverse factors?
Export of crude oil
Russia is the world’s second largest exporter of crude oil. India and China have been importing large quantities of crude oil from Russia at cheap prices. Another report notes that Russia’s public spending increased dramatically after the declaration of war. Russia’s central bank printed more currency. The government continued to spend huge sums of money on arms and armor. Russian factories are working double overtime to manufacture weapons and ammunition for the Russian army. Thus, additional spending and production contributed to GDP growth.
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Cash withdrawals are not allowed in dollars and euros
There was also a situation where Western companies could not take money out of Russia. They also made a rule that companies selling assets in Russia are not allowed to withdraw money in dollars and euros. All this has become a favorable situation for the economic growth of Russia. The only question now is whether they will be able to sustain this growth when the war is over.
