Russia's Economy: Between a Crash and a Hard Landing

Abstract

Based on macro-level data, most analysts forecasting Russia's economic development following the introduction of new large-scale sanctions expect a 10-12% drop in GDP, 20-25% inflation, and an increase in unemployment from 4.4% to 7-8% by the end of this year. This article argues that in the context of a severe economic shock, micro-data and comparison with similar cases offer a better guide to future developments than macro-data. They point to a much sharper decline in economic activity than is currently being forecasted.