The bank JPMorgan said that the Russian economy is feeling better than expected, despite the special operation in Ukraine and Western sanctions, writes Business Insider. According to the bank, a survey of business sentiment in Russia “signals not very deep recession.”

JPMorgan Bank predicts that the Russian economy is feeling better than expected, even amid tough sanctions – and is likely to experience only a shallow recession, albeit a prolonged one.

In a note sent out to clients last week and published Monday, the Wall Street bank said that national business sentiment surveys signaled “not too deep recession,” and consequently suggested that growth forecasts might improve.

Late February, the U.S. and its allies imposed harsh economic sanctions against Russia after Vladimir Putin’s troops deployed a special military operation in Ukraine. The severity of the punishment led to predictions that the Russian economy would go into a tailspin.

In March, JPMorgan predicted that Russian GDP would shrink 35 percent in the second quarter compared to the previous quarter and 7 percent for the year. The IMF expects Russia’s economy to shrink by 8.5% in 2022.

But, the bank told clients last week that the economy was in better state than expected, citing business surveys and high-frequency indicators – such as electricity consumption and financial flows.

“Therefore, the available data do not point to a sharp drop in activity – at least for the moment,” JPMorgan analysts concluded.

According to the current forecast, Russian GDP in the second quarter is likely to be higher than forecast in March.

JPMorgan explained the Russian economy is far from its normal state. In particular, the situation with export orders is the worst, and companies expect further problems in the future.

“We expect the impact of sanctions to increase in the coming quarters,” JPMorgan said. – Thus, Russia’s GDP profile is increasingly consistent with a prolonged but not very sharp recession.”

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