As of: February 28, 2024, 6:01 p.m
By: Bona Hyun
Comments
Press
Split
A bitter setback for the Kremlin: The West is taking tougher action against Putin.
In addition, more and more allies appear to be stopping business with Russia.
Update from February 23, 2024, 5:27 p.m.:
According to the International Monetary Fund (IMF), the Russian economy has “surprised” in terms of growth in view of the sanctions against Moscow in the wake of the war in Ukraine. “It is a war economy,” said the IMF. Communications Director Julie Kozack on Thursday (February 23) in Washington, according to the German Press Agency (dpa).
The Russian economy has a high proportion of military spending, which stimulates production.
“There are also a whole range of social transfers that stimulate consumption.”
However, we are currently also seeing signs of an “overheating of the economy” – such as an increase in inflation.
In the medium term, it is assumed that Russia's economic growth will slow down, said Kozack.
She cited the reasons for this as the country being cut off from the international financial system and having only limited access to technology.
This will have a negative impact on the Russian economy in the future.
“I would also like to point out that Russia has lost some highly qualified workers in terms of human capital.”
First report from February 22nd, 9:18 a.m.:
Moscow - Russia's economy is suffering more from Western sanctions than Vladimir Putin would like.
The Russian president had repeatedly tried to circumvent Western punitive measures, relying on help from long-standing allies such as China.
Things aren't looking good for Putin: As sanctions become more effective, help from important trading partners is decreasing.
Tougher sanctions against Russia in the Ukraine war are weakening the economy
There have recently been signs that support from Putin's allies is gradually crumbling.
Russian economist Sergei Guriev also shares this opinion.
Chinese, Turkish and Central Asian banks are becoming increasingly vigilant when it comes to payments to Russian business partners.
China's largest bank even wants to leave Putin hanging.
“If Putin can now avoid sanctions, it will be through third, fourth and fifth countries that charge him brokerage fees.
And the more the intermediaries are paid, the less goes into his pockets, and that's a good thing,” said Guriev in an interview with the online magazine
The Conversation
(article from February 21).
There has long been a far-reaching import ban on crude oil, coal, steel, gold and luxury goods, as well as punitive measures against banks and financial institutions.
And these measures are now apparently worrying the countries with which Putin had done business.
In addition to Chinese banks, several banks in the United Arab Emirates (UAE) are also stopping payment transactions with Russia for fear of secondary sanctions.
Putin wants to avoid sanctions - but more and more partners are letting him down
On Wednesday (February 21, 2024), the EU again adopted sanctions against Russia.
This is intended to freeze the assets of around 200 additional people, companies and institutions in the EU.
Business is no longer allowed to be done with them - and they are no longer allowed to enter the EU.
The 13th package is one of the EU's “most comprehensive to date,” said the Belgian Presidency in Brussels.
My news
Traditional company has to close and lays off all employees
Taxpayers shell out 23.3 million euros for rents from citizens’ benefit recipients – per month
Clear-cutting at large chocolate manufacturer: 2,500 jobs at risk
Expert suggests zero round of pensions – SPD reacts outraged: “Pension adjustment is not a handout” read
“Overreaching”: President of the Social Court is tough on the court reading with citizens’ money
Consumer advice center is suing Eon – it's about thousands of euros per customer
Vladimir Putin at a meeting in Tatarstan (photo taken on February 22nd) © Sergei Bobylev/Imago
Although Russia is trying to cover up economic problems with supposedly good data, this at least gives the impression that everything is going well.
The state statistics office in Russia published positive economic data for 2023 weeks before the Russian presidential election.
The economy grew by 3.6 percent compared to 2022, the Rosstat authority announced on Wednesday (February 7) in Moscow based on initial calculations.
Russia's economy is not doing as well as Putin portrays
But several economists raised doubts about the representation.
Guriev also considers the data collected from Moscow to be “misleading”.
GDP is not the same measure of economic performance in wartime as in peacetime.
The increased GDP has nothing to do with the performance of the Russian economy.
A number that is more meaningful, according to Guriev, is retail sales.
This value fell by 6.5 percent between 2021 and 2022.
Many experts also attributed Russian economic growth to high military spending.
Putin wants to plan even higher military spending for the year: it should amount to six percent of GDP.
However, the strong dependence on spending on the Ukraine war is not sustainable.
Economists alongside Guriev expect the Russian economy to “overheat.”
Even the governor of the Russian central bank warned against this.
“The economy is expanding so quickly because it uses almost all available resources,” said chairwoman Elwira Nabiullina.
“Stubbornly high inflation” is evidence that the economy has deviated from its potential.
There is a lack of capacity to meet the increasing demand, said Nabiullina.
How long the Russian economy will survive under the impact of sanctions remains an exciting question.