Russia’s economy was predicted to collapse after Western countries imposed unprecedented sanctions on Moscow over the war in Ukraine. But last week, the Russian statistics bureau Rosstat said gross domestic product (GDP) in the first six months of the year had fallen by just 0.4%.

Capital investment is up, the ruble has rebounded and inflation — which soared when the war began — has started to subside, according to official data. This week, a top Russian government official predicted that GDP for the whole year would be just 3% lower and not contract by a third. So what is going on?

As expected, oil and gas revenues, particularly from the European Union, are continuing to shore up the country’s finances, despite the likes of Germany and Italy cutting their reliance on Russian energy. The state-owned energy giant Gazprom just announced a record first-half profit of 2.5 trillion rubles ($41.36 billion, €41.41 billion), sparking a 30% rise in its share price.

“Even if the Russian economy is performing worse than six months ago, it’s not enough to stop [Russian President Vladimir] Putin from financing the war,” Maxim Mironov, a professor of finance at the IE Business School in Madrid, told DW.

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