It’s a little music that we hear more and more regularly in the West, and which is the joy of Russian propaganda: the sanctions imposed by Western countries against Moscow, following its invasion of Ukraine, do not work.
Not only would these measures be useless but, it is sometimes explained, they would even be counter-productiveallowing Vladimir Putin to enrich his country thanks in particular to the record prices reached by energy on the world markets.
It is true that the tumble is less immediately visible than it seems, and even the International Monetary Fund (IMF) agreed, at the end of July, that the country had absorbed the shock better than anticipated. It is also true that the ruble is doing better than resisting, thanks to energetic action – but not sustainable over time – of the Russian central bank.
It is true, finally, that Russian oil has found, in China or India, two important new outlets – but it is significant despite significant immediate incomeThose are customers at a discount and the market is already down.
Yet denying Russia’s current and future economic slump seems like a lie, pure and simple. In March, economists even explained that the war in Ukraine could cause a thirty-year leap back to the Russian economy.
The country suffers in particular of an unprecedented brain drainwhich risks weigh very heavily in the future of the nation. Also highly dependent on technology and IT western, Russian industry suffers –and his tanks now use components for dishwashers.
At the end of July, a report published by Yale University thus explained that the myth of a resilient Russian economy in the face of a Western economy worn down by the energy war game was “simply wrong”: the damage is massive, Moscow is in the hard and, its energy manna being able to heading into a slow, long-lasting declineis likely to be more and more so.
And if those who refuse to believe in this thesis prefer a source internal to Russia, they can be reassured: Bloomberg has found one. The American media thus had access to a confidential report, written at the request of the Kremlin, and which draws a dark present and a dark future for the country.
If Russia publicly explains that the recession will be limited to 3% in 2022, the report is much less optimistic. Three scenarios are thus described. In the best of Russian worlds, 2023 would see a contraction in GDP of 3.8%, before returning to -1.3% of its pre-war level in 2024.
In a scenario named “inertial”, the slide would be 8% in 2023 and, cumulatively, 6% the following year. In the worst case, the country’s economy would plummet by 11% next year, and remain at -11.9% in 2024 compared to the level before the invasion.
In the median scenario, the Russian economy would only return to its pre-war level in 2028, in the worst case it would remain at -3.6% in 2030 compared to 2021. The report notes that the country suffers a de facto blockade, which severely handicaps its export capacities. It also takes note of the departure of computer specialists, crucial for the future of the country – they would be more than 200,000 to have left Russia since the beginning of the conflict.
The document warns, finally, that the declines in exports of oil, metals, chemical products for wood, could be so long-lasting that “these sectors will cease to be the engines of the economy”.
As for cutting off gas destined for Europe, if it is difficult news for the latter, it could cost the Russian state 6.6 billion dollars each year, or about the same in euros, in various taxes. As the country’s oil embargothis net loss risks weighing heavily on the country’s investment in its precious energy sector, and thus jeopardizing its future income.
On the issue of imports, the Russian report read by Bloomberg explains that it is often impossible to find alternatives to products that are victims of sanctions, which handicaps domestic production. Even the agricultural and agri-food sector is suffering, to the point of perhaps quickly pushing Russians to change and reduce their food consumption.