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Since the early days of the Russian offensive in Ukraine, Joe Biden has used the term to describe the sanctions imposed by the West that would “crush” the Russian economy, but the truth is that after six months, the numbers haven’t come out and I give a lot of reasons to the American president.
Economic sanctions are causing a downturn, yes, but not quite as frankly as they appeared in the first few months. For example, inflation has slowed, having reached about 18% in April, and the Russian Central Bank forecast it will be between 12% and 15% for this year, analysis to CNN.
There is more: the ruble, which shortly after the invasion fell by 30% and reached a new low against the dollar, recovered and even in June reached Highest rating in seven years. After the central bank initially raised interest rates, it lowered them back to pre-war levels. Initial forecasts for a GDP contraction for 2022 were in the range of 8% to 10%. Now the central bank is already expecting a downward revision, between 4% and 6%. The IMF does not differ in opinion and calculates, for Russia’s GDP for 2022, a contraction of 6%.
Between March and July, says the International Energy Agency, Russia’s revenue from selling oil and gas to Europe doubled compared to the average in previous years – this despite the fact that gas shipments to Europe have fallen 75%.% in recent months. With regard to oil exports outside the continent, the reality also did not prove as harsh as expectations: despite the slight decrease recorded during the summer months, remittances continued, especially towards Asia. If in July last year this market accounted for 37%, then this year most of Russia’s offshore oil exports are now the destination of this continent: 56%.
Between January and July, according to data from the consulting firm Kpler, China increased its sea imports of Russian oil by 40%, the prices of which were at the same time adjusted downward. India increased in the same period, according to the same source, these imports by 1,700%.
The fact that Russia has stopped publishing many of its economic statistics, pointed out The Washington Post recently made analysis difficult, but in July the country reported a federal budget deficit of 900 billion rubles, equal to 8% of gross domestic product, Sergei Guriev, an economist and director of Sciences Po in Paris, told those newspaper.
Putin still has money because he made a lot of money in the early months of the war, when oil prices were high and the economy was not yet stagnant. The expert pointed out that the sanctions are now starting to work, and have begun to work significantly.
If the unemployment rate stabilizes at 4%, it is largely because the Kremlin has forced struggling companies to give workers partially paid leave or reduce their working hours, Deputy Chief Economist Elena Rybakova told the US newspaper from the Institute of International Finance. , indicating that this measure is not sustainable in the long term.
The 10% drop in retail sales in the second quarter of this year, compared to the same period a year earlier, will be further evidence that the economy is faltering and consumers are already beginning to cut back on spending – only in the face of higher prices especially for imported products.
Speaking to The Washington Post, Maria Shagina, a sanctions expert at the International Institute for Strategic Studies, said 78% of Russians don’t have any major purchases on the horizon. Since 2015, levels of consumer confidence have not been very low in the country.
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