MOSCOW: Russia’s recession will be less severe than expected due to oil exports and relatively stable domestic demand, according to the latest International Monetary Fund forecasts released on Tuesday.

While the IMF estimates Russia’s economy to have contracted by 21.8 percent during the second quarter at a quarterly annualised rate, for the year as a whole the Russian economy is now forecast to contract only 3.4 percent.

That is a considerable improvement from the six percent annual drop the IMF forecast in June.

“The contraction in Russia’s economy is less severe than earlier projected, reflecting resilience in crude oil exports and in domestic demand with greater fiscal and monetary policy support and a restoration of confidence in the financial system,” the IMF said in its latest World Economic Outlook report.

Western countries have adopted a series of economic sanctions against Russia since its February 24 invasion of Ukraine.

The sanctions have so far had little impact on Russian oil exports, while Moscow appears to have to cut off most of its natural gas exports to Europe in retaliation for sanctions.

Efforts by Western countries to wean themselves off Russian oil have only had limited impact.

“As European and US firms reduced Russian oil purchases, Russian oil was rerouted to China and India at a discount” to global market prices, said the IMF.

Russia has also instituted a serious of counter sanctions and a pursued financial and monetary policies to protect its economy, including sharply limited currency exchange in order to protect the ruble.