IMF: Europe is suffering more than expected, and Russia is less than expected

The International Monetary Fund announced today, Tuesday, that it "expects the Russian economy not to be affected much this year by Western sanctions," adding that European countries, in turn, "suffer more than expected."

The IMF predicted that "Russian GDP growth will contract by 6% in 2022, much less than the 8.5% decline it had bet on in its previous forecast, which was published in April."

The fund stated, in its report, that it "expects the Russian economy to contract less than was assumed in the second quarter of the year," and noted that "exports of crude oil and products, outside the energy field, were better than expected."

"In addition, domestic demand appears to be showing some resilience thanks to containment of the impact of sanctions in the domestic financial sector, and a weaker-than-expected labor market decline," he explained.

On the other hand, the International Monetary Fund noted that the effects on major European economies "were more negative than expected".

In contrast, the IMF expects the effects of these sanctions to be more than expected in 2023, the year in which the International Monetary Fund expects a recession in the Russian economy by 3.5%, which is 1.2 points less than its previous forecast.

Western countries, in conjunction with the Russian military operation in Ukraine, on February 24, imposed a severe campaign of sanctions against Russia, in order to restrict Moscow financially and economically.

Economic growth forecasts for 2022 have been lowered for Germany (-0.9 point at 1.2%), France (-0.6 point at 2.3%), and Spain (-0.8 point at 4.0%).

The IMF explained that these consequences are stronger due to "high energy prices, as well as declining consumer confidence and slowing manufacturing activity, caused by continued supply chain disruptions and the high cost of raw materials."

The complete suspension of Russian gas exports is expected to "significantly" reduce the growth of the eurozone in 2022 and 2023, and this would force European countries to ration energy, which will affect the main industrial sectors.

The price of gas recorded a record high today in Europe, as the price of the August futures contract reached $2,200 per 1,000 cubic meters, for the first time since its historic record high last March, recording a 13% increase in one day.