May 17, 2022

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Report: The Russian economy is reeling under the influence of sanctions

Report: The Russian economy is reeling under the influence of sanctions

According to the Associated Press, the impact of Western sanctions on the Russian economy began most pronounced two months after Moscow occupied Ukraine.

As the West moved to cut off access to Russia’s foreign reserves, restrict technological imports and take control measures to isolate the Russian economy, the Kremlin began drastic measures to protect the economy, raising interest rates by 20 percent and keeping capital. Restrictions, and forcing Russian companies to send their profits to the ruble.

As a result of the actions of the Kremlin, the ruble recently recovered after collapsing at the start of the war, and last week changed part of the central bank’s interest rate hike, which Russian President Vladimir Putin was quoted as saying. Faced “Western aggression” from sanctions.

Michael Alexeev, a professor of economics at Indiana University, said: “The Russian government wants to paint a picture that things are not really that bad.

A closer look at the situation in Russia reveals that sanctions are killing the Russian economy, according to the Associated Press.

Russia’s official economic statistics agency, Rossstadt, says the country has suffered the worst inflation in two decades, reaching 17 percent, the highest level since 2002.

Several reports indicate that some Russian companies are being forced to close, while tank manufacturers are being forced to shut down production due to a shortage of spare parts, while US officials point to the impact of sanctions on the closure of car factories in Lada. .

The mayor of Moscow said the city expects to lose 200,000 jobs from foreign companies as more than 300 companies leave, international supply chains close and international carriers leave the Russian market.

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Russia faces a historic default in its securities, which could lock the country out of international credit markets for years to come.

U.S. Treasury officials and most economists have called for patience, saying it will take several months for sanctions to fully take effect, especially if Russia does not have access to revenue and spare parts, and more factories and companies are expected to close, prompting an increase in tariffs. Unemployment.

After Russia’s approval of Ukraine’s occupation of Crimea in 2014, it took almost a year for it to show signs of affecting its economic data, along with rising inflation, declining industrial production and a slowdown in economic growth.

David Feldman, a professor of economics, said: “Indicators to see if sanctions work are not yet easy to find.

New Russian measures to cover up the impact of Western sanctions

Russian officials have stopped releasing economic data on its banks, oil imports and loans in an attempt to cover up the impact of Western sanctions imposed on Moscow in response to its occupation of Ukraine.

There is little transparency about how sanctions will affect the Russian economy, especially in relation to the oil and gas sector, which is dependent on the European and Asian markets, due to the extraordinary efforts of the Kremlin.

Estimates from the Institute of International Finance and Economists Benjamin Helkenstock and Elena Rybakova estimate that the Russian economy could shrink by more than 20 percent if the European Union, the United States and Britain ban Russian oil and gas imports.

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The European Union agreed to ban Russia’s coal by August and discuss sanctions on oil, but there is no consensus on halting natural gas because European countries rely heavily on Russian supplies, and Russia’s revenues from Europe in exchange for oil and gas are about $ 850 million a day.

“Unknown target” .. Russian oil is finding its way to European markets

An “unknown target” is a new sign that Russian oil exports have been carrying to its customers in recent weeks in an effort to overcome the isolation facing global energy markets.

Russian news sites have reported in recent weeks that there have been several closures between major stores and shopping centers after Western companies and brands suspended their operations and withdrew from the Russian market.