Despite nine rounds of sanctions imposed by the EU, the Russian economy recorded only a limited decline in its GDP in 2022. This “resistance” of the Russian economy was greeted by President Vladimir Putin on Tuesday during his state of the art address. of the nation However, some Western observers and politicians point to blind spots in the official statistics provided by Moscow.
The Russian economy resists. Far from the “collapse” predicted by French Economy Minister Bruno Le Maire after the first waves of Western sanctions in the wake of Russia’s invasion of Ukraine, Moscow’s GDP only fell by 2.1% in 2022, according to the service. Russian statistics Rosstat. The Russian economy is even expected to pick up again this year with growth of around 0.3%, according to the International Monetary Fund (IMF).
“We have guaranteed the stability of the economic situation, we have protected the citizens,” Russian President Vladimir Putin proclaimed on Tuesday, February 21, in his state of the nation address, stating that the West had failed to “destabilize our society.”
The explanation for this apparent resistance of the Russian economy lies, first of all, in the rise in hydrocarbon prices in 2022, which offset the drop in the volume of exports -a drop of around 25% in the case of gas -.
The EU, once Russia’s biggest customer, managed to cut its gas imports by 55% in the hope of reducing Moscow’s ability to finance its offensive in Ukraine. At the same time, however, Russia turned to other trading partners, such as Turkey, India and, above all, China, whose imports through the Siberian Force gas pipeline soared 48%, according to Russian Deputy Prime Minister responsible for Energy, Alexander Novak. .
As the Russian war in Ukraine enters its second year, the arms industry has also supported the activity. “There was a huge increase in the production of the metallurgical industry. It is a pretty clear sign that some branches of the military-industrial complex managed to adapt. Today we can see that the factories in the Urals, for example, work 24 hours a day “, explains David Teurtrie, professor of Political Science at the Catholic Institute of Higher Studies.
Another strong point of the Russian economy, according to President Putin: the agricultural sector. “By the end of the agricultural year, that is, by June 30, 2023, we will be able to increase the total volume of grain exports to 55-60 million tons,” the Russian president declared.
“We are used to problems”
Gas, oil, finance, trade, technology… all sectors of the Russian economy were affected by successive waves of Western sanctions. However, Russian companies are adapting. Excluded from the SWIFT system, the essential secure messaging system, banks turn to intermediaries to get around sanctions.
Western products are easily imported through third countries such as Kyrgyzstan, Armenia or Georgia, border countries at the heart of parallel trade circuits intended to supply Russian industry.
The food industry was also able to recover with the appearance of local players who came to replace those sold by Western brands with their products, such as the famous Pepsi or Coca-Cola soft drinks.
“Since the beginning of capitalism in Russia, we have experienced at least four major crises. We are used to problems and, to tell the truth, these are not the most important ones we have faced,” says Yuri Saprygin, a businessman from the city. from Kaluga, in central Russia, contacted by France 24.
Faced with Western sanctions, he was forced to replace components from Europe and Taiwan with Russian and Chinese equipment. “It wasn’t easy, but we didn’t stop the business,” explains the manager of this SME that sells medical equipment to analysis laboratories.
However, not all sectors suffer in the same way. The technological sector, highly dependent on imports for electronics, has been greatly affected by Western sanctions on semiconductors, essential in the military and aeronautical industries, as well as in the automobile sector.
A truncated economic situation?
The automobile sector is one of the sectors that is currently suffering the most in Russia. According to the Association of European Businesses (AEB), almost one million fewer cars were sold last year than in 2021, representing a 59% decrease. This figure says a lot about the impact of the sanctions, but also about the loss of purchasing power of Russian consumers, who, like all Europeans, suffered high inflation of almost 12% in the last year. However, according to the Central Bank of Russia, it should be contained between 5 and 7% in 2023.
The situation is therefore far from idyllic. And some observers and policy makers doubt the official statistics provided by Russia. Reacting to the Russian GDP figures, French President Emmanuel Macron declared on Tuesday that “the Russian economy is suffering a lot”, stating that he “does not believe” Moscow’s “propaganda”.
Some important indicators, such as foreign trade data, are no longer published. “Probably to prevent the West from claiming the effectiveness of the sanctions,” says Agathe Demarais, director of global forecasts at the Economist Intelligence Unit (EIU) in the magazine ‘Foreign Policy’.
In addition, more than 300,000 men were called up to fight in Ukraine and hundreds of thousands of Russians have fled the country in the last 12 months. A situation that, ultimately, could affect the country’s production.
“Beyond the sanctions, it is probably this aspect that penalized the Russian economy the most in the second half of the year, because this emigration was mainly of wealthy Russians with titles,” analyzes David Teurtrie.
Is the worst coming?
Although the Russian economy is still on its feet, it appears to be indefinitely weak and the situation could get worse. Some sanctions have not yet had time to take effect. This is the case of the sanctions that affect oil, the main source of income for the federal budget.
A European embargo on Russian crude oil exports has been in force since December. It is accompanied by a maximum limit on the price of a barrel transported by sea. Since February 5, the same mechanisms apply to refined products.
These embargoes could considerably penalize the state budget. According to data from the Center for Research on Energy and Clean Air (Crea), the EU has paid 84 billion euros to Russia for its oil since the invasion of Ukraine.
“This is just the beginning. You have to see the sanctions as a marathon, not as a sprint”, says Agathe Demarais, who predicts in the coming months “an impossible equation between financing the war in Ukraine and maintaining social aid at a high enough level to avoid the malaise” among the population.
“Oil prices are lower and the impact on the Russian budget is being felt, but markets will definitely stabilize,” says David Teurtrie. According to the researcher, Russia is far from suffocating and still has serious arguments to use in the face of the pressure of sanctions: huge financial reserves and “a low level of indebtedness that offers it significant borrowing capacity.”
*Article adapted from its original in French
