The Russian Economy is Tumbling into Depression, Wiping Out a Decade of Economic Growth

The full effect of Western sanctions is starting to be felt in Russia and officials in Vladimir Putin's government have been forced to admit the impact.

Newsweek: "Alexei Kudrin, chairman of Russia's accounts chamber, a parliamentary financial body, said that preliminary estimates showed base rate inflation could reach as high as 20.7 percent in the 2022/2023 financial year." ...

"This is a crisis that is bigger than the 2009 crisis, bigger than the pandemic crisis," Kudrin said, according to news agency RIA Novosti.

"Of course, we are forced to admit that the real incomes of the population will decrease," he told Russian lawmakers."

With the ruble seesawing in value against the dollar, hundreds of western companies leaving the country, tens of thousands of educated Russians fleeing the nation, and the inability of its companies to purchase spare parts, Russia's economy is facing a historic downturn.

PBS: "Moscow’s mayor says the city is looking at 200,000 job losses from foreign companies shutting down operations. More than 300 companies have pulled out, and international supply chains have largely shut down after container company Maersk, UPS, DHL and other transportation firms exited Russia."

Finance.Yahoo: “Because of the export controls we’ve already put in place, Russia’s top two manufacturers of tanks are no longer in business,” Deputy Secretary of the Treasury Wally Adeyemo said Monday. “Russia today has far fewer tanks than they had going into this invasion, and they can't make more because of the action that we're taking with sanctions.”

The impact of all this will be far worse than Putin ever imagined. The United States and its allies have created a package of economic sanctions that will set Russia back decades.

Telegraph.UK: "Russia is facing its deepest economic decline in almost three decades as it grapples with the fallout from Putin’s invasion of Ukraine, the Finance Ministry has admitted.

Internal forecasts estimate that Russia’s GDP could shrink by as much as 12pc [%] this year, Bloomberg reports."

"That would be the biggest contraction since 1994, when Russia’s Soviet-era economy lurched towards capitalism under its first president Boris Yeltsin. It would also wipe out around a decade of economic growth."

BBC: "BlueBay Asset Management economist Timothy Ash says that overall sanctions have been much more aggressive than many had expected.

"I think the longer-term impact will be devastating," he tells the BBC, adding that "Russia being cut out of Western supply chains because it is an unreliable partner" will push the country into recession."

"Even the Bank of Russia has acknowledged that as companies look for different suppliers, deal with boycotts by shipping companies or fail to get hold of the technology they need, the country will face a period of "reverse industrialisation".

"The reality is, Russia will have limited access to financial markets, lower growth, lower living standards and a higher cost of borrowing."

Moreover, US Treasury officials and most economists say that the impact of the sanctions will multiply over time. If Russia can’t get access to capital, parts, or supplies, more factories and businesses will shut down, leading to more shortages, higher unemployment, and a shrinking economy. And, as the economic situation worsens, expect even more of Russia's best and brightest workers to flee to neighboring republics, the European Union, and America.

#Russia #Putin #economics

By: Don Lam & Curated Content