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The West did not expect this: how the Russian economy held up against the background of harsh sanctions

Date: March 27, 2023 Time: 03:46:09

Now the West is surprised to discover that our economy has proven resilient to the conditions in which it has placed us. Photo: Eric Romanenko/TASS

Do you remember how it all started? March 2022 – dollar at 120 rubles, strong statements about the withdrawal of many international companies from the Russian market, restrictions on the operation of banking payment systems, border closures, unprecedented difficulties with import supplies, gloomy forecasts for the future. So, not only Western experts, but even the Russian Central Bank promised inflation by the end of the year of 20-22%. It seemed that our economy would inevitably collapse, and we would again return to those very 90s, which most Russians remember with a shudder. However, it does not happened.


Now the West is surprised to discover that our economy has proven resilient to the conditions in which it has placed us. The New York Times wrote about this the day before, stating that Russian foreign trade had returned to the level of February 2022.

According to the publication, “partly this may be due to the fact that it is difficult for many countries to stop doing business in Russia.” Not so long ago, we wrote that Swiss financial analysts calculated that only 9% of companies in the EU and G7 countries left Russia. The second reason is that not all states have managed to reduce their dependence on our energy resources and other assets.

At the same time, in the fall of last year, the Federal Customs Service (FCS) reported that Russia’s exports for the nine months of 2022 amounted to $431 billion (25% more compared to 2021), and the imports – $180 billion (minus 16%).

Georgy Ostapkovich, Director of the Market Research Center of the Institute for Statistical Research and Knowledge Economy, NRU HSE, said that the main part of our export products are hydrocarbon raw materials. The key embargo on their supplies came on December 5, and up to that point we had been honoring our contracts. Therefore, 2022 cannot be called an indicative year of some major changes.

– The West rightly considered that raw materials and state sectors in the economy prevail in Russia, – explained financial analyst Mikhail Belyaev, – but considered that this is our weakness. In fact, the authors of the sanctions did not take into account the main thing – there is a demand for hydrocarbons all over the world. Oil and gas are needed in the West, in the East, in Africa and in Latin America. All that was required of us was to refocus on other markets. This is what we did, and this determined the stability of our economy. According to forecasts, we will maintain our export level. And we have options even for growing volumes. In this sense, Africa holds great promise.

The main part of Russian export products is hydrocarbon raw materials. Photo: Maxim Kiselev/TASS


As for imports, sanctions have played an important role here. This is what we see in the FCS data. But it’s not that bad. Yes, the flow of European products has been reduced, but the “sacred place” has been successfully occupied by oriental brands. For example, there are fewer Samsung and Apple products, but Chinese brands such as Xiaomi, Realme, Honor are gaining popularity.

– As for imports, the slowdown was mainly until the fall, – said the expert Ostapkovich, – then parallel imports began to work. The government reported that in 2-3 months it reached a turnover of $20 billion, this is a very decent amount for a short time. But in addition, the economic agents themselves are looking for new logistics schemes, changing their orientation from west to east. Thanks to this, in Russia you can now buy almost any product, including the same iPhone.

According to experts, the volume of foreign trade has grown significantly with Turkey, China, India, Armenia, Kyrgyzstan, Uzbekistan, Kazakhstan, Belarus. Here are some figures to confirm: China began to export more to Russia by 12.8% than last year, Belarus – by about 40%, Turkey – by 55%.

– All this is partially covered by losses from previous trade with the West, – explained Ostapkovich. – But all the export and import deliveries that went to the eurozone, we still cannot compensate. Therefore, the problem will remain in 2023, but there is no chaos and critical moods in government and business. Here it is necessary to pay tribute to businessmen. Despite the unprecedented turbulence, they manage to make key management decisions so as not to lose positions in the market. They, like strong nails, hold against all odds. The stability of our economy is a great business merit.

Puck Henry
Puck Henry
Puck Henry is an editor for ePrimefeed covering all types of news.

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