‘Disastrously paralyzed’: This is how Russia’s economy actually stands after Western sanctions | Ukraine and Russia war

The detailed academic study was previously published on the Social Science Research Network (SSRN) and has not yet been reviewed by other scholars. But, among others, Lieutenant General Mark Tess, the number two in our country’s Ministry of Defense, called it a “very interesting paper” showing that sanctions are working, “despite a carefully prepared program of good news from Moscow.”

According to the researchers, the Kremlin has published only positive reports about the Russian economy since the raid, resolutely ignoring the unfavorable statistics. This gave rise to the idea that the international front against Russia had turned into a war of economic attrition casting a shadow over the West, due to the remarkable resilience and prosperity of the Russian economy. “This is not true. Economic forecasts based on Kremlin figures are unrealistically favorable for Russia.”

So what is the real state of the Russian economy five months after the invasion and imposition of Western sanctions? Particularly bad, according to the researchers’ data sources.

Thus, the strategic position Russia as a source of raw materials irreversibly deteriorated. “It now has to contend with losing its key markets from a weak position. The country also faces significant challenges as it moves to shift its focus to Asia, with non-fungible exports such as gas.”

Moreover Russian imports he is pretty much collapsed. Russia now needs to get the critical parts and technology it needs from reluctant trading partners. This is leading to a significant supply shortage in the local economy, the report said.

The local production Complete now I stopped. Putin fails to replace lost companies, products and talent, despite his delusions about self-sufficiency and import substitution. All this led to high prices and fear among consumers. ”

The A thousand global companies These are from Russia the leftIt represents, according to researchers’ calculations, about 40% of GDP (Gross domestic product). As a result, almost all foreign investment over the past three decades has been lost. At the same time, an unprecedented flight of capital and population arose. It’s about a mass exodus from the country’s economic base.”

In response, Putin will resort to “strict and clearly unsustainable fiscal and monetary measures.” But that does not seem to prevent it, and for the first time in years, the government has a budget deficit and its foreign reserves are running out. Despite the high energy prices. Kremlin finance there much worse than became popular Approved. “

Makes local financial markets In Russia this year The worst performance in the world Despite strict capital controls. It reflects the continued weakness of the economy, with a contraction in liquidity and credit. In addition, Russia is isolated from international financial markets, which limits its ability to benefit from capital.

Moreover future It doesn’t look very good, according to the study. The researchers concluded that “as long as the West in the union continues to maintain and increase the pressure of sanctions, there will be no return for Russia from economic oblivion.” Anyone who claims that the Russian economy has recovered is not telling the truth. It’s reeling and it’s not time to hit the brakes.”

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