Moscow - (AFP) - From falling unemployment to low inflation and lower-than-expected estimates of deflation, the Russian economy is showing resilience despite the sanctions thanks to its energy resources, but the long-term challenges remain many.

Moscow says that inflation is declining and all jobs are filled, which contradicts the predictions of many financial experts of a catastrophe.

On Tuesday, the International Monetary Fund offered some support for Russia's view, indicating that the recession would be less severe than expected due to oil exports and relatively stable domestic demand.

The International Monetary Fund predicted that the Russian economy would contract by only 3.4 percent over the whole year, a far cry from the disastrous international forecast in March, in the aftermath of the military intervention in Ukraine.

Likewise, the International Foundation indicated in a report to "the steadfastness of crude oil exports and domestic demand with increasing support for fiscal and monetary policies and the restoration of confidence in the financial system."

In September, President Vladimir Putin assured Russian economic decision-makers of "normalizing the situation," considering that the "peak" of difficulties had become "the past."

According to him, this is reflected especially through the “unemployment rate at its lowest levels,” that is, at 3.8 percent, and the “lowering of inflation” to 13.7 percent in one year, after breaking records in the spring in the wake of the first batch of sanctions. international.

"We can say that the impact of the first sanctions has passed, especially the effects on the financial sector," said Elena Rybakova, deputy chief economist at the Institute of International Finance (IIF), in response to an AFP question.

"Russia has succeeded in preparing and adapting to the sanctions," she added.

Diplomatic and economic divergence with the West has accelerated rapprochement with China, Russia's energy-hungry neighbor with which it shares a border of more than 4,000 km.

Faced with a virtually unattainable European market, "companies are forced to find alternatives in other markets, particularly in Asia and Turkey," Natalia Zubarevich, an economist at Moscow State University, told AFP.

Moscow and Beijing have already announced their desire to place gas contracts between them in rubles and yuan, which is a victory for Russia by "removing the dollar" from its economy.

In addition, Moscow praised the "OPEC +" coalition's announcement last week of its desire to sharply reduce its oil production, which displeased Washington, at a time when Moscow may benefit from the rise in black gold prices.

And all this comes while the difficulties faced by the Europeans and the Group of Seven countries in determining the price of Russian oil contributed to overcoming the obstacles that the Russian economy might face.

But structurally, the Russian economy will find itself more dependent on the energy windfall, while sectors with high added value will face further downturn.

Increasing isolation is likely to burden those who depend on foreign countries technologically, especially since promises of alternative Russian products are still limited to the theoretical level.

This comes as Russia faces a shortage of assembly parts that has hit car production. In mid-September, for example, the Japanese company Toyota closed its assembly plant in St. Petersburg (northwest), due to a shortage of electronic components.

Elena Rybakova estimates that "about 50 percent of companies affected by the sanctions still find it difficult to find alternative suppliers."

As a result, Russia decided to relax safety and environmental standards for vehicles produced in the country.

But in a working document issued by the Russian Ministry of Industry and Trade, the content of which was leaked to the Russian press, officials recently expressed their annoyance at the delay of "10 to 15 years" in the Russian technology industry, and the "dependence" on foreign production and the shortage of workers.

Another source of concern remains the European ban on Russian oil scheduled for December 5, which precedes the ban on refined products scheduled for February 2023, at a time when the Russian economy is particularly dependent on fuel.

Between January and August 2022, more than 40 percent of federal revenue came from the sale of gas and oil, according to Russia's Finance Ministry.