Not since the collapse of the Soviet Russia faced economic upheaval from a scale triggered by Western sanctions after the Ukraine invasion. Half the reserves of foreign exchange $ 640 billion were frozen, some of the top banks have been cut off from the international payment system and urral crude oil, thanks to the risk of sanctions, sold around $ 20 per barrel of discounts for international prices.
Around 1,000 western companies, accounting based on one estimate for 40 percent of Russia’s gross domestic product, has limited operations.However, six months after Vladimir Putin’s aggression triggered the heaviest Western sanctions against Moscow, Russian economy survived better than many people expected.
Although the war seems, at least for now, in Stalemate, and Turkish President Recep Tayyip Erdogan claims Putin is ready for a negotiated solution, sanctions have not eroded Moscow’s ability to fight.Moving swift by the central bank Moscow to impose capital control and raise sharp interest rates has stabilized rubles.
The higher global oil price as a whole has compensated by “Russian discounts”, and the increase in sales to China, India and Turkey helps counteract exports to the EU. The International Energy Agency estimates that last month’s Russian oil production was less than 3 percent below the before war.
Many attractive western companies, moreover, have not left or have been sold to local buyers, so assets are still operating. Increased trade with large developing markets, especially Turkey, has provided other cushions. The Russian central bank is now predicting GDP shrinking by heavy but not a 4 to 6 percent disaster this year; The IMF projects a decline of 6 percent, down from an estimated 8.5 percent in April.
With the European population that faces an unprecedented increase in heating bills, less accustomed to difficulties than Russia, and more vulnerable to being brought to the streets, Putin can calculate Russia better placed to withstand economic pain than many of his Western colleagues.