The economy expanded in the first quarter despite Western sanctions, according to the national statistics service

Russia’s gross domestic product (GDP) grew by 5.4% year-on-year in the first quarter of 2024, the state statistics agency Rosstat said in a preliminary report published on Friday.

According to the estimates, Russia saw robust growth in retail turnover (up 10.5%), manufacturing (up 8.8%) and construction (3.5%) in January-March.

The Rosstat data aligns with an earlier estimate from the Economics Ministry, but exceeds that of the Bank of Russia (4.6% growth) and analysts’ expectations (5.3%). The agency is due to publish more detailed data on GDP in mid-June.

According to an earlier forecast from the Bank of Russia, GDP growth is expected to slow in the second quarter due to tightening fiscal conditions. The regulator, however, expects consumer and investment demand to remain high and continue to drive economic growth.

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The positive data comes despite multiple rounds of Western sanctions introduced since the start of Russia’s military operation in Ukraine in February 2022.

The measures have ranged from blacklisting most Russian banks and cutting them from the SWIFT interbank messaging system, to freezing some $300 billion in Russian foreign exchange reserves.

As a result, GDP suffered a downturn in 2022, contracting 1.2%. However, data for 2023 showed that the economy has recovered, posting growth of 3.6%. Many analysts have attributed this performance to Russia’s trade pivot to the East, and economic policies implemented to offset the effect of restrictions.

In April, the International Monetary Fund (IMF) said it expects the Russian economy to grow faster than all advanced economies in 2024. GDP is forecast to expand by 3.2%, exceeding the expected growth rates for the US (2.7%), the UK (0.5%), Germany (0.2%) and France (0.7%).

Russian Finance Minister Anton Siluanov earlier said he expects GDP growth in 2024 to equal that of last year, while the Bank of Russia has been more cautious in its predictions, expecting growth of 2.5-3.5%.