Russian economy ‘crippled at every level’ despite Putin’s propaganda

Russia’s economy is being “catastrophically” crippled by Western sanctions according to experts, despite Vladimir Putin’s efforts to hide the damage.

Analysts at Yale looking at “private Russian language and unconventional data sources” say imports have “collapsed” and domestic production “has come to a complete standstill”.

Russia has lost companies representing around two-fifths of its GDP amid an exodus of Western businesses, they claim, undoing about three decades of foreign investment.

The pressures are tipping Mr Putin into “unsustainable, dramatic” fiscal and monetary interventions, the report says, claiming “Kremlin finances are in much, much more dire straits than conventionally understood”.

The report, from Yale’s Chief Executive Leadership Institute, describes itself as “one of the first comprehensive economic analyses” of how Russia’s economy is faring five months on from the invasion of Ukraine.

It belies claims that the West, where many countries are grappling with surging inflation spurred by the conflict, is coming off worse than Russia in the war of economic attrition unleashed by unprecedented sanctions.

Analysts, led by Professor Jeffrey Sonnenfeld, said Russia is much more economically damaged than many in the West realise. The Kremlin has curbed the number of official data releases it produces since the invasion and subsequent backlash in a bid to cover up the impact.

“Since the invasion, the Kremlin’s economic releases have become increasingly cherry-picked, selectively tossing out unfavourable metrics while releasing only those that are more favourable,” the analysts wrote.

“These Putin-selected statistics are then carelessly trumpeted across media and used by reams of well-meaning but careless experts in building out forecasts which are excessively, unrealistically favourable to the Kremlin.”

The analysis examined a range of data from outside of the Kremlin’s influence, including non-public analyses by investment banks, high-frequency data, releases from international partners and Russian documents.

It found the retreat of more than 1,000 companies from Russia had knocked out revenues and investments exceeding $600bn, about 40pc of Russian GDP. Analysts said these exits may not have an immediate impact but would force Russia into a “dramatic, forced” economic transformation. The companies also had around a million local staff.

“The findings of our comprehensive economic analysis of Russia are powerful and indisputable: not only have sanctions and the business retreat worked, they have thoroughly crippled the Russian economy at every level,” they said.


About the author

Related Post

Leave a comment

Your email address will not be published. Required fields are marked *