On Wednesday, the European Commission (EC) issued revised figures in its Autumn 2023 Economic Forecast which substantially increased the growth projections for the economy of Russia for this year.

The EC predicted that the Russian economy was poised to rebound on the back of “stronger-than-earlier expected domestic demand underpinned by fiscal stimulus.”

The EC now predicts that Russia’s GDP will grow by 2% this year, increasing the prediction from May for 0.9%, in spite of the Western sanctions which were designed to hamper Russia’s economy. The EC further forecasts that in 2024 and 2025 strong domestic demand will grow the Russian economy by 1.6% each year.

The report said, “The government’s social programs and interest rate subsidies, accompanied by rising real wages on the back of a tight labor market, boosted household spending. Investment picked up too, supported by increased military production and ongoing efforts to establish new trading routes and supply chains.”

The EC report noted that Brussels had not expected the Russian economy to prove so resilient in the face of the broad, sweeping sanctions which had been designed to cripple it, however Russia had “succeeded in diverting a large share of its exports, especially commodities, to willing buyers, notably China and India.”

The report went on to say that although the Russian economy is still experiencing inflationary pressures, with consumer price growth to hit 6% in 2023, it is expected that inflation will be brought back down through tighter monetary policy over the coming years, with it reaching 4.6% in 2024 and 4% in 2025.

However the EC prediction falls short of the latest projection of the Economy Ministry of Russia, which forecasts an increase of the Russian GDP of 2.8% this year.