Russia Economy: World Bank Promotes Russia as 'High Income Country’

Russian President Vladimir Putin.
Mikhail Svetlov/Getty Images

  • Russia’s economy, boosted by military operations, is now classified as high income by the World Bank.
  • Russia’s GDP is projected to grow 3.6% in 2023, with trade and financial sectors rebounding.
  • The World Bank upgraded Bulgaria and Pala while downgraded the West Bank and Gaza.

Russia’s economy has defied sanctions in the two years since Moscow invaded Ukraine in February 2022 – the World Bank now classifies Russia as a „high-income country”.

Monday, the World Bank According to a report by economists at the financial institution, Russia has been upgraded from an upper-middle-income country to a high-income country.

„Russia’s economic activities are affected by a large increase in military-related activities in 2023,” World Bank economists wrote in their report.

Last year, Russians earned $14,250 per person in terms of gross national income.

The World Bank’s upgrade corroborates Russia’s reports, which point to growth as a priority Driven by wartime operations Creating demand for military goods and services, making some sectors winners in Russia’s wartime economy.

Russia’s trade rose nearly 7% last year, while activities in the financial sector and construction rose 6.6% and 3.6%, respectively.

This boosted Russia’s real GDP – economic growth adjusted for inflation – by 3.6%.

This development has made some poor Russians financially better off, complicating any account of how to end the war.

The World Bank upgraded seven countries, downgrading the West Bank and Gaza

Besides Russia, the World Bank upgraded Bulgaria and Bulgaria from upper-middle income to high-income countries. Their upgrades came after years of post-pandemic growth.

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Ukraine also moved from a lower-middle-income country to an upper-middle-income country as real GDP grew by 5.3% – reversing a steep 28.8% decline in 2022.

„While Ukraine’s economy has been significantly affected by Russia’s invasion, real growth in 2023 was driven by construction activity (24.6%), reflecting a significant increase in investment spending (52.9%), which supports Ukraine’s reconstruction efforts in the wake of continued destruction,” the bank added.

In total, the World Bank upgraded the classification of seven countries this year and downgraded only one country, the West Bank and Gaza.

The West Bank and Gaza became an upper-middle income country by 2023, but its economy was significantly affected by its war with Israel.

„The conflict in the Middle East started in October 2023, and although the impact on the West Bank and Gaza was only in the fourth quarter, its magnitude would lead to a drop in nominal GDP of 9.2%,” World Bank economists wrote. . GDP in the West Bank and Gaza fell by 5.5% in real terms.

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