As the FT points out, it has not faced an economic boom of this magnitude since the fall of the Soviet Union. Half of its $640 billion foreign exchange reserves are frozen, several leading banks are cut off from the international payment system, Russian crude is selling at a discount of about $20 a barrel, and he calculates that a barrel is worth about $1,000. . Western firms, by one estimate, produced 40 percent. Russia’s GDP is a limited function.
“Russia’s economy is performing better than many expected,” writes the FT, “six months after Vladimir Putin’s aggressive Moscow prompted tough Western sanctions.” Sanctions have not yet weakened Moscow’s ability to continue fighting.
Rapid moves by the Russian central bank, which introduced capital controls and sharply raised interest rates, stabilized the ruble, higher oil prices around the world offset the “Russian discount” and boosted sales to China, India and Turkey, the newspaper explained. Offsetting declining exports to the EU. Many retreating Western companies did not exit entirely or sell to local buyers, so assets continued to operate, and increased trade with large emerging markets, particularly Turkey, provided another cushion. As a result, the Russian Central Bank is currently predicting that GDP will contract by 4-6% this year. This in turn means economic problems for Russia, but certainly not an economic disaster.
“Putin may feel that Russia is better able to withstand economic pain than many Western countries,” writes the FT, but this is a misconception. The sanctions are not intended to lead to an immediate collapse of the Russian economy. Over time, Western actions will become an increasingly tight ring, and the costs for Russia will pile up..
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