The economy has shifted toward defense manufacturing and financing the Armed Forces of Russia since 2022, with the federal budget spending on national defense planned for 2024. As Russia increased production of weapons and other war-related goods, the manufacturing output followed a positive trend, which has benefitted the economy.
Energy sector is crucial to the Russian economy With the largest natural resources value worldwide, Russia is highly dependent on its energy industry. The country is among the leading oil, gas, coal, and steel producers. Furthermore, earnings from foreign sales of energy commodities are a major contributor to Russia's federal budget, as mineral products occupied over 60 percent of the total exports. Therefore, energy import bans from Russia were included in sanction packages of several Western countries due to the war in Ukraine. For example, the United States prohibited imports of oil, liquefied natural gas (LNG), and coal from Russia, while the EU banned Russian coal and seaborne oil shipments. Thus, Russia redirected its fossil fuel shipments to China, India, and Turkey.Russia's economy is expected to expand at a moderate pace in the following years, despite the Western sanctions. The reasons behind the forecast growth are increased commodity prices, strengthened trade relations with non-sanctioning countries, and development of domestic production capabilities.
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