Russia has been under unprecedented Western sanctions for more than a year. But sanctions from Ukrainian allies are killing the Russian economy, albeit slowly, although the aggressor still has money for the war against Ukraine.
The situation in the Russian economy is losing stability, but the Kremlin continues to assure the country’s population of the opposite. However, according to Business Insider, based on an article written by Yale University researchers Jeffrey Sonnenfeld and Stephen Tian, Western sanctions and the mass migration of multinational companies have seriously damaged the country’s economic potential.
What is happening in the Russian economy now?
According to experts, Russia has already lost in the face of sanctions $253 billion in private equity. The money was withdrawn from the war financial system after the start of the large-scale invasion of Ukraine by the Russian Armed Forces. Additionally, as researchers note, Moscow Lacking access to Western technologies and experience, What Russian companies really need. At the same time Foreign direct investment has almost completely dried up.
Important
Experts say, “We cannot fall into the trap of thinking that Putin is in good shape, but we should not give up on effective measures that will put pressure on him.”
In their material, Jeffrey Sonnenfeld and Stephen Tian point out other reasons why the Russian economy is suffering. For example, as of February 2022, according to their data Approximately one million Russians fled to other countries. Now there is a labor shortage in the Russian Federation, which is currently estimated at five million workers.
At the same time, the Russian authorities themselves are worsening the situation in the economy. For example, they He introduced strict capital controls that made Russian assets nearly worthless on world markets. And the transfer of nationalized assets from Western companies does not make Russia richer. Sanctions, meanwhile, have made it impossible for Russian companies to issue new shares or bonds on Western markets.
Important
“Russia, which has never been able to provide a single final product (neither industrial nor consumer) to the world economy, is paralyzed. It is far from being an economic superpower, as almost all of its raw materials can be easily replaced with materials from other countries. Its war machine is only now made possible by state-controlled enterprises.” It moves thanks to its cannibalization,” the material says.
Meanwhile, Andrei Novak, a leading economic expert and head of the Novaya Strana charity foundation, believes that the Russian economy can no longer withstand the pace of war. So, according to the expert, Russia can economically survive another year, but not more. Let us note that on October 13, it was learned that Russia was having difficulty financing its army and that the economy could decline by another 25% in the near future. At the same time, as economist Endoy Liliko points out, economies at war often find a way to last longer than expected.
Source: Focus
John Holton is a seasoned author and journalist, known for his expertise in economics. He currently works as a writer at 24 news breaker, where he provides readers with in-depth analysis and commentary on the latest economic developments. With a background in finance and a talent for explaining complex economic concepts in a clear and accessible way, John’s writing is a must-read for anyone interested in staying informed about the economy.