Russia economy shrinks as sanctions bite

Russia's economy contracted by four percent year-on-year in the second quarter, the national statistics agency said Friday, as Western sanctions take their toll in the wake of Moscow's military offensive in Ukraine.

In the period from April to June, gross domestic product "amounted to 96 percent of the level attained in the same period of 2021, preliminary estimates show", Rosstat said in a statement.

It was the first full quarterly growth data to be published since Moscow sent troops into its pro-Western neighbour in late February and western countries slapped stinging economic sanctions on Russia in response.

After Russian GDP expanded by 3.5 percent year-on-year in the first three months of 2022, the country is now facing a long period of recession.

The Russian central bank said Friday that it is projecting economic contraction of between four and six percent for the whole of 2022 and then a further contraction of between one and four percent for 2023, before growth picks up again in 2024.

"The decline in GDP will bottom out in the first six months of 2023," said the deputy head of the Bank of Russia, Alexei Zabotkin.

"The economy is moving towards a new long-term equilibrium... With the transformation of the economy, growth will resume," he said.

Western sanctions have targeted Russia's energy and banking sectors in particular.

Inflation in the country soared to a two-decade high in April, but has since slowed somewhat, but remains high, standing at 15.1 percent in July.