The Russian economy will go back four years in three months due to US and European sanctions

Russia’s wealth generation will shrink 4.7% year-on-year in the second quarter as a result of the invasion of Ukraine, a war campaign that began on February 24 and continues to develop. The response of Western countries was based on a series of sanctions that “suffocate” the country’s income under the leadership of Vladimir Putin.

In this context, analysts consulted by Bloomberg agree that the economic decline will exceed 4% compared to the period between April and June of last year. Basically, in three months, the forte of vodka will return to four years in economic activity.

The economy will lose four years of growth, returning to its 2018 size in the second quarter. We expect deflation to slow in the fourth quarter as accommodative monetary policy supports demand. even so, The economy will lose another 2% in 2023, Specialized media indicated that the European energy embargo would affect exports.

It is worth noting that The sanctions imposed by the United States and the European Union shocked the Russians And there are many production lines that have felt the impact, especially the automobile industry and foreign trade.

This lower dynamic also led to lower spending by the population The Central Bank of the Eurasian state estimates that the economic downturn will worsen in the coming quarters and does not expect a recovery until the second half of 2023.

Evgeny Suvorov, chief economist at Banco CentroCredit, told international agencies this “The Russian economy will reach its lowest point in the middle of 2023 at best.”. In any case, analysts highlighted fiscal and monetary stimuli that softened the strength of the sanctions and softened the blow, as an economic contraction of 10% was expected in principle in the second quarter.

In this context, JP Morgan analysts have improved forecasts and now expect a decline of 3.5% at the end of 2022.

On the other hand, the embargo on oil exports indicates an additional risk to wealth generation in Russia, as production declines will begin this month, in line with the forecasts of the International Energy Agency, which indicates a 20% cut. In pumping crude oil in early 2023.

Restrictions on Russian oil and gas have also caused the cost of energy for Europeans to rise, bringing them to the brink of economic collapse. Similarly, the war with Ukraine brought global trade to wheat and agricultural inputs to a halt, which in turn drove up food prices.

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