In the context of a sluggish global economic recovery and ongoing geopolitical conflicts, Russia's economic growth in 2024 has not only surpassed the government’s initial expectations but has also significantly outperformed the global average as well as developed economiesThis scenario provides a curious insight into the complex mechanisms driving Russia’s economy amid external pressures.

Prime Minister Mikhail Mishustin pointed to recent data from the Russian Federal State Statistics Service, which indicates that the Gross Domestic Product (GDP) of Russia experienced a growth of 4.1% year-on-year in the previous year, a figure that exceeds the earlier forecast of 3.9% by a notable 0.2 percentage pointsDespite a slowdown in growth during the last half of the year, which raised concerns about a potential sharp decline, the economy managed a substantial uptick by the year's endNotably, the data showed that in December 2024, Russia's GDP recorded an impressive year-on-year increase of 4.5%, outpacing the annual averageFurthermore, the agency revised the GDP growth of 2023 from 3.6% to 4.1%, a change that reflects the evolving economic landscapeThis performance not only surpassed Russia’s own predictions but also exceeded global averages and outshone the figures from developed economies, resulting in what was termed “satisfactory outcomes.”

In terms of scale, Russia's nominal GDP is projected to reach a historic peak of 200 trillion rubles in 2024, which is significantly attributed to steady advancements in the manufacturing sectorLast year, industrial output within Russia rose by 4.6%, surpassing expectations and playing a crucial role in economic accelerationMishustin stated that the economy successfully navigated unprecedented sanctions and has now seen stable and vibrant growth for the second consecutive year, owing to a series of government measures and the collaborative efforts of academia and industry personnel.

Indeed, Russia's economic performance in 2024 has exceeded expectations across multiple fronts, even eclipsing the most optimistic forecasts from authoritative sources

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This growth has manifested in three key characteristicsFirstly, the manufacturing sector showed remarkable resultsIn 2024, certain industries in Russia, particularly the manufacturing sector, continued to thrive, bolstered by high levels of investment and consumer activity, becoming a primary driver of economic expansionMishustin emphasized that the growth impetus in 2024 largely stemmed from “high investment, vibrant consumption, and robust performance in manufacturing.” More specifically, the machinery manufacturing sector proved to be a significant catalyst for growth, with statistics revealing an 8.1% increase in the manufacturing sector during the first eight months of 2024, and machinery manufacturing alone saw a growth rate close to 20%. There were also double-digit growth rates recorded in various fields, including transport engineering, automotive manufacturing, computer and electronic equipment production, and pharmaceutical manufacturing.

However, traditional sectors such as energy are facing significant challenges and adjustments due to external sanctionsMishustin noted that Russia's fuel and energy complex is still in a transitional phase, actively seeking new partners and developing promising marketsDespite tightening sanctions adversely affecting energy exports, the minister claimed that the decline in this sector has been minimized, with a decrease of less than one percentage point in the mining sector.

The economic outlook for Russia presents both opportunities and challengesOn one hand, there’s the issue of inflation, which soared to 9.52% in 2024, considerably higher than the targeted level of 4%. Mishustin remarked that the primary goal of the federal government is to work collaboratively with the Bank of Russia to implement responsible macroeconomic policies, striving to curb inflation effectivelyOn the other hand, challenges arise from the labor market, with the unemployment rate in 2024 hitting a historical low of just 2.3%. Such a low unemployment figure indicates that the issues surrounding labor shortages in Russia are unlikely to see immediate resolution

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