Russia economy resilient; Gaza war weighs on neighbours: EBRD

Russia's economy will grow further this year despite Western sanctions over its Ukraine invasion, while Israel's war against Hamas in Gaza will weigh on neighbouring nations, Europe's development bank forecast Wednesday.

The London-based European Bank for Reconstruction and Development (EBRD) issued fresh GDP projections for the regions in which it operates on the second day of its annual meeting, held this year in the Armenian capital of Yerevan.

Russia's resilient economy is set to expand 2.5 percent in 2024, the EBRD predicted, adding that it was back above levels seen prior to its 2022 invasion of Ukraine.

That represented a major upgrade from the prior guidance of 1.0 percent that was given in September, as Moscow offsets the impact of sanctions with vast expenditure on its war machine.

However, it still marks a significant slowdown from the 3.6 percent growth it registered in 2023.

 'Refocused on war effort' 

"I think it was unrealistic to expect that sanctions against Russia would lead to a deep economic and financial crisis, as many had hoped," EBRD chief economist Beata Javorcik told AFP.

Russia has "refocused its economy on the war effort", she noted.

"So this is leading to faster growth" but "is this growth translating into greater wellbeing of its people? That's doubtful," Javorcik remarked.

Western sanctions do not function perfectly but they have nevertheless curbed technology imports into Russia.

And more generally, the Ukraine conflict has also helped spark an exodus of both multinational companies and highly skilled labour from Russia to elsewhere, the bank added.

Javorcik highlighted that sanctions helped spark a record annual loss for Russian state...

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