Sanctions are hitting the Russian economy, although Putin says otherwise
Almost two months after the Russo-Ukrainian War, the Kremlin has taken extraordinary measures to mitigate a Western economic counteroffensive. Yes OK Russia may claim some symbolic victories, the full impact of Western sanctions is beginning to be felt in a very real way.
As the West tried to cut Russia’s access to its foreign exchange reserves, limit imports of key technologies, and take other restrictive measures, the Kremlin took some drastic measures to protect the economy.
The real effects of the sanctions are beginning to be felt in the Russian economy.
These included raising interest rates up to 20%, imposing capital controls and requiring Russian companies to convert their profits into rubles.
As a result, the value of the ruble recovered after an initial drop, and the central bank reversed part of its rate hike last week. the russian president, Wladimir Putin, He was emboldened and, evoking images from World War II, proclaimed that the country had withstood the “lightning bolt” of Western sanctions.
“The government wants to paint a picture that things aren’t as bad as they really are,” said Michael Alexeev, an economics professor at Indiana University who has studied Russia’s economy in transition from the US collapse Soviet Union.
How will sanctions affect Russia?
https://www.youtube.com/watch?v=4-bjF7I_PRk
A closer look, however, shows that the sanctions are killing the economy Russia:
— The country is experiencing its worst inflation in two decades. Inflation hit 17.3% last month, the highest level since 2002, according to Rosstat, the state’s economic statistics agency.
For comparison, the International Monetary Fund expects consumer prices in developing countries to rise 8.7% this year, up from 5.9% last year.
— Some Russian companies had to close. Several reports state that a tank manufacturer had to stop production due to missing parts.
US officials point to the closure of car plants for Lada, a brand of Russian company Avtovaz majority-owned by the French automaker. renault, as a sign that the sanctions are having an effect.
– The mayor of Moscow says the city is facing the loss of 200,000 jobs due to the closure of factories owned by foreign companies.
More than 300 companies have pulled out and international supply chains have largely been shut down after container firm Maersk, UPS, DHL and other shipping companies left Russia.
— Russia is facing a record default on its bonds, which will likely keep the country out of debt markets for years.
Meanwhile, Treasury officials and most economists are urging patience, saying it will take months for sanctions to take full effect.
Over time, if Russia is unable to obtain sufficient amounts of capital, parts, or supplies, more factories and businesses will close, resulting in higher unemployment.
Almost a year passed after Russia was sanctioned for seizing the Ukrainian peninsula Crimea in 2014 when its economic data showed signs of distress, such as higher inflation, falling industrial production and slowing economic growth.
“Honestly, the things we should be looking at to see if sanctions are working aren’t easy to see yet,” said David Feldman, an economics professor at William & Mary in Virginia.
“We will look at the price of the goods, the quantity of the goods produced and the quality of the goods. The last one is the hardest to see and probably the last to show up.”
Transparency on how the sanctions are affecting Russia’s economy is limited, largely due to the extraordinary efforts the Kremlin has made to prop them up. Moreover, its largest sector, oil and gas, is largely unhindered by Europe’s, China’s and India’s dependence on Russian energy.
Benjamin Hilgenstock and Elina Ribakova, economists at the Institute of International Finance, estimated in a report published last month that if European Union, Great Britain Y United States of America Russian oil and natural gas have been banned, the Russian economy could contract by more than 20% this month. Current forecasts assume a contraction of 15%.
While the EU has agreed to ban Russian coal by August and is discussing oil sanctions, there is no consensus among its 27 nations on stopping oil and natural gas.
The European Union is much more dependent on Russian supplies than Britain and the United States, which have banned or phased out Russian oil. Meanwhile, Russia gets $850 million a day from Europe for its oil and gas.
The United States and its allies have argued that they have sought to tailor sanctions in ways that hamper Russia’s ability to wage war and financially affect those at the highest levels of government, while leaving ordinary Russians largely unaffected.
But the Russians have noticed an increase in prices. Residents of a suburb of Moscow They said the 5-gallon jugs of drinking water they regularly order are nearly 35% more expensive than before. In supermarkets and shops near you, the price of 1 kilogram of sugar has increased by 77%; Some vegetables cost 30% to 50% more.
In The Truth News We will follow the latest news from Russia how he tried to storm the Mariupol steelworks, Ukraine says.
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