For the first time since the beginning of the conflict in Ukraine, Vladimir Putin admits that the international community’s sanctions against Russia could have “negative consequences on the national economy in the medium term”. During a meeting with the government broadcast on state television, the Russian president expressed – albeit masking it – concern for the fate of the country’s financial balance.
Also on the subject is a recent analysis by the Wall Street Journal, according to which “the Russian economy is about to collapse”, revenues are cut to the bone and the general strategy has veered towards a lower growth trajectory, probably in the long term. Putin allegedly made a miscalculation, convinced that the threat of cutting energy supplies would limit Europe’s support for Ukraine. This led to a halving of revenues compared to last year, widening the budget deficit. The tax gap hit $34 billion in those first two months, the equivalent of more than 1.5 percent of the country’s total economic output.
Compared to the dollar, the ruble has lost 20% of its value since November, thanks to a rush to use the sovereign wealth fund to cover losses. Uncertainty about the future then held back private investment. “The Russian economy is entering a long-term setback,” predicted Alexandra Prokopenko, a former Russian central bank official who fled the country shortly after the invasion. For the Russian oligarch Oleg Deripaska instead the country would be short of cash “There will be no money next year, we need foreign investors”.
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