Russia not in economic crisis despite 'thousands of sanctions', Deputy PM says in response to western critics

Alexander Novak calls Middle East a ‘black swan’ amid global economic uncertainty

As Russia hosts a major global business conference, Deputy Prime Minister Alexander Novak responded defiantly to western critics who say his country’s economy has soured.

“There is no crisis in the Russian economy,” he told The National at the St Petersburg International Economic Forum. “That’s despite thousands of sanctions.”

His comments come as the US and EU prepare new sanctions that would put Russia’s oil and gas sector directly in the crosshairs. “We proceed from the fact that our economy and our business community will work under any sanctions they come up with,” Mr Novak said.

If approved, the EU’s latest package would cap Russian oil exports at $45 per barrel and ban transactions on the Nord Stream pipeline. It would also prohibit Russian banks and financial institutions from operating in third countries outside the EU, which the bloc says helps Russia to avoid sanctions.

The European move comes after the US Senate pushed back plans to consider a bill to impose sanctions on Russia until July. “Despite all the thousands of sanctions and desires, the Russian economy has shown growth rates above 4 per cent annually over the past two years, significantly higher than the global average,” Mr Novak said.

But that growth is beginning to slow. In the first three months of this year, Russia’s GDP grew 1.4 per cent year-on-year, according to the country's federal statistics service Rosstat. That is the smallest rise since the second quarter of 2023. It has also faced stubbornly high inflation.

“Today, as a result of high growth rates, our inflation rates have increased,” Mr Novak explained. “Today we are in the so-called economic cooling management period in order to reduce inflation.”

Mr Novak said the global economy was currently facing great challenges and uncertainty, including trade wars and geopolitics factors. “The main trend that we are noting today is the shift of the centres of economic growth to the East, primarily to the Asia-Pacific region,” he said.

“Of course, this in turn is a factor that forces western countries to take inadequate measures [sanctions and trade wars] in order to maintain their status.”

While the latest crisis in the Middle East may have propped up oil prices temporarily, Mr Novak said it was “difficult to judge” how the market would respond.

He added that the “current situation in the Middle East is like a black swan for the global economy and we do not fully understand how it can end".