The IMF raises its economic outlook for both Russia and Ukraine, even as the war between them rages on

• The International Monetary Fund upgraded its economic forecasts for Russia and Ukraine Tuesday.
• It expects both to post similar annual GDP growth to the US in 2023.

The Russian and Ukrainian economies are holding up much better than was previously thought even as the war between Moscow and Kyiv rages on, the International Monetary Fund said Tuesday.

The financial agency raised its 2023 GDP growth projections for the two countries to around 2% in its quarterly World Economic Outlook report – meaning both economies are expected to expand at a similar rate to the US this year.

The IMF upgraded its outlook for Russia's GDP growth from 1.5% to 2.2%, citing "substantial fiscal stimulus, strong investment, and resilient consumption in the context of a tight labor market".

It also lifted its growth projection for the Ukrainian economy by 5 percentage points to 2%, which it said was due to stronger-than-expected demand and a sharp drop-off in inflation, which has fallen from 27% to 7% over the past year.

If the IMF's predictions are correct, the two economies will have enjoyed bounceback years after experiencing sharp contractions in the aftermath of Vladimir Putin's February 2022 invasion.

Western countries have imposed widespread sanctions on Russia since the Kremlin first attacked Ukraine, freezing half the country's foreign currency reserves and capping oil prices in a bid to chip away at Putin's export revenues.

Moscow has responded by ramping up its spending on defense in preparation for a long, drawn-out conflict, which has helped prop up its economy.

The IMF upped its 2023 growth projection for Russia but revised its forecast for next year down from 1.3% to just 1.1%, which would make it the worst performer out of the world's major developing and emerging market economies.