Russia has withstood the unprecedented pressure of Western sanctions.
This was announced on Monday, April 18, by President Vladimir Putin at a meeting on economic issues.
According to him, restrictions on the part of unfriendly states have become a negative factor and should have undermined the financial and economic situation in Russia.
It was assumed that the restrictions would provoke a panic in the markets, the collapse of the banking system and a massive shortage of consumer goods.
However, this policy of the West failed, Putin stressed.
“The economic blitzkrieg strategy failed.
Moreover, the sanctions were not in vain for the initiators themselves.
I mean the growth of inflation and unemployment, the deterioration of economic dynamics in the United States and European countries, the decline in the standard of living of Europeans, the devaluation of their savings,” the Russian leader said.
At the same time, the situation in the Russian economy is stabilizing, Vladimir Putin believes.
As the head of state specified, the ruble exchange rate has already returned to the level of the first half of February and is largely determined by a strong balance of payments.
So, from January to March 2022, the difference between the inflow of foreign currency from abroad and its outflow outside the country exceeded $58 billion for the first time.
“Foreign currency is returning to the banking system of the country, the volume of deposits of citizens is growing.
As for the consumer market, after a short rush for a number of goods - and this happens all the time in such situations, always - retail demand has returned to normal.
Commodity stocks in retail chains are being restored,” Vladimir Putin said.
In turn, the growth of consumer prices in Russia has already begun to gradually slow down, but in annual terms, the inflation rate has reached 17.5%, the president said.
The last time a similar indicator could be observed back in 2002, as evidenced by Rosstat data.
“These are very high values.
People feel this on their family budget, they feel how prices have risen, and we need to support our citizens, help them cope with the inflationary wave.
In this regard, let me remind you of the decision already taken to index all social payments, pensions and salaries of specialists employed in the public sector.
The specific parameters of such an increase should be prepared by the government,” Putin added.
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Recall that since the end of February 2022, the United States, the European Union and a number of other states continue to impose ever new economic sanctions against Russia.
This is how the West reacts to Moscow's special operation to protect the Donbass republics from aggression from Ukraine.
In total, almost 9.7 thousand restrictions have already been introduced against Russia - more than against any other country.
This is stated in the materials of the global sanctions tracking database Castellum.AI.
Restrictions, in particular, affected the banking industry, the energy sector, aviation and trade.
Along with this, almost half of the country's gold and foreign exchange reserves (worth $300 billion) were frozen, and many international companies announced their withdrawal from the Russian Federation.
“The situation in the economy is difficult, but not catastrophic.
We can temporarily observe an increase in unemployment and a decrease in real incomes of the population.
At the same time, in October-November, the economy is likely to go into recession.
That is, in general, the sanctions have a painful effect, but one should not expect any kind of collapse, ”Georgy Ostapkovich, director of the Center for Market Research at the Institute for Statistical Research and the Economics of Knowledge at the Higher School of Economics, told RT.
It should be noted that in order to stabilize the situation in the economy, the Central Bank and the government have taken a whole range of measures.
Thus, as part of supporting the ruble and the financial market, the authorities obliged exporters to sell 80% of their foreign exchange earnings and canceled VAT for citizens when buying gold.
Along with this, the Central Bank temporarily raised the key rate to 20% per annum, limited the withdrawal of capital abroad, closed access for foreigners to exchange trading, and introduced a temporary procedure for handling cash in the country.
In addition, the government has approved a number of initiatives to help businesses.
In particular, we are talking about credit holidays and soft loans for companies, a moratorium on inspections of enterprises, as well as tax breaks for the hotel and IT industries.
To curb inflation, the Cabinet of Ministers banned the export of certain goods, provided subsidies to farmers and legalized the so-called parallel imports.
In addition, the authorities are now discussing the possibility of introducing external management for foreign companies leaving Russia.
As expected, the appointment of a temporary administration at foreign enterprises will minimize damage to local producers and save jobs.
“Obviously, you need to constantly monitor the situation in the economy, the labor market and, as they say, keep your finger on the pulse, make timely decisions for the stable, confident work of business and entrepreneurs.
So far, the government has certainly succeeded, and so has the Central Bank,” Vladimir Putin stressed.
Structural changes
Against the background of sanctions, already around the middle of 2022, the Russian economy will enter a period of structural transformation.
This opinion was voiced by the head of the Central Bank Elvira Nabiullina on Monday.
According to her, trade restrictions will increasingly affect the real sectors of the economy, since many industries depend on foreign components.
In the context of import restrictions, Russian companies will have to look for new partners and alternative ways to deliver products, as well as switch to their own production of components.
Along with this, businesses will be forced to reorient their export flows.
However, such a restructuring of work will take time, Elvira Nabiullina believes.
“At the moment, perhaps this problem is not yet so strongly felt, because there are still reserves in the economy, but we see that sanctions are being tightened almost every day, and we see restrictions on the transportation of Russian goods and the work of Russian carriers. .
But the period when the economy can live on reserves is finite,” the chairman of the Central Bank emphasized.
As a result, a period of economic transformation may be accompanied by a surge in prices for certain goods, and businesses will need to adapt to new conditions.
At this time, the Bank of Russia will not try to return inflation to the target by any means, but will not allow its uncontrolled growth, Nabiullina assured.
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© Press Service of the State Duma of the Russian Federation
As Mark Goykhman, chief analyst at TeleTrade Group of Companies, suggested in an interview with RT, certain sectors of the economy will begin to face a shortage of industrial and consumer goods.
Against this background, by the end of 2022, inflation in Russia may exceed 20%.
Nevertheless, this problem should be solved not by raising rates, but by non-monetary methods, the expert believes.
“The authorities should focus their efforts on replenishing the market.
It is necessary to stimulate the production of goods, including through government orders for businesses.
It is necessary to form new economic ties and supply chains, prevent monopolistic manifestations in the market and increase effective demand by increasing the income of business and the population,” Goykhman explained.
A similar point of view is shared by Georgy Ostapkovich.
In his opinion, inflation may accelerate to 25%, but there are no prerequisites for a shortage of food and non-food products in Russia.
“Still, Russian agriculture can cope with ensuring food security.
A more serious challenge will be the reduction of technological imports, which are present in almost all enterprises in the real sector.
The Russian authorities understand this, so they are massively launching a policy of import substitution and changing logistics towards the eastern direction,” Ostapkovich concluded.