Assessing the Impact of Sanctions on the Dynamics of the Russian Economy From 2022 to 2024

The study quantitatively assesses the impact of sanctions on the Russian economy from 2022 to 2024 by estimating the losses due to sanctions and identifying the factors that shaped GDP during this period. The assessment is based on a vector autoregressive model with exogenous variables (VARX). The model examines GDP and its key components: gross fixed capital formation, government expenditure, exports, and imports. The exogenous variables include the Brent crude oil price, quantitative indices of US and EU sanctions, and the unemployment rate. A counterfactual scenario was constructed assuming no further tightening of sanctions after 2021. This provided a comparison of the actual dynamics to the forecast trajectory and an assessment of the effects of external shocks. The main negative effect occurred in 2022, after which GDP shifted to growth. During 2023 and 2024, the key driver was the increase in gross fixed capital formation, while government expenditure provided additional but less significant support to output. At the same time, exports and imports remained below the forecast trajectory, reflecting the impact of sanctions on Russia’s foreign trade. Total losses attributable to external restrictions from 2022 to 2024 reached approximately 2.9 trillion rubles, or 0.7% of GDP per year on average. The largest negative effect occurred in 2022 and amounted to 3.4% of GDP, decreased to 0.8% in 2023, but turned positive in 2024 to reach 1.9% of GDP.

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