Russia’s Central Bank has admitted that it can no longer bear the economic consequences of sanctions imposed because of the war against Ukraine.
The Russians began to prepare mentally for the economic crisis related to the invasion of Ukraine. The head of the Russian Central Bank, who tried to leave his post twice during the war, said reserves to support the economy were not endless and sanctions would be tangible in the summer. Athletistic telling details.
“Period of structural changes”
The head of the Central Bank of Russia Ilnara Elvira Nabiullina, said that the country’s economy is facing significant problems that will be noticeable already in the second or third quarter of this year, that is, already in the summer. He announced this at a meeting of the State Duma of the Russian Federation today, April 18.
“The time when the economy can survive in the reserves is finite. And in the second and third quarters we will enter a phase of structural change and the search for new business models,” Nabiullina said.
He noted that the sanctions mainly affect the financial market, but now they will start to further affect the Russian economy.
“The main problems will be attributed to restrictions on imports and logistics of foreign trade, and in the future with restrictions on exports. Russian manufacturers will have to find new partners, logistics or switch production of products of previous generations, “added the banker.
In addition, the head of the regulator said that as a result of the sanctions, more than half of Russia’s gold and foreign exchange reserves have been frozen, and it will be difficult to maintain a stable economic situation in the country with outstanding gold and yuan. . .
Commenting on the high level of inflation, Nabiullina insisted that the Central Bank would not “in any way” return inflation to the target amount of four per cent.
“We will not try to bring it back (inflation – ed.) Lower in any way – it will prevent businesses from adapting, where restoring the supply of necessary imported parts is more difficult, more expensive, and it will definitely affect the price of the final product, “he said.
Sad Elvira Nabiullina: “The sanctions have mainly affected the financial market, but now they will start to affect the real sectors of the economy. The main problems are related to restrictions on imports, logistics, and later on the export of Russian products ” pic.twitter.com/bkMVSIjEXP
– Rustem Adagamov (@adagamov) April 18, 2022
At the same time, Vladimir Putin clearly lives in a different reality. Today at a meeting on economic issues, he said Russia had “withstood unprecedented pressure of sanctions from the West.” Moreover, in his opinion, because of the sanctions imposed, the standard of living of Americans and Europeans, and not Russians, has dropped.
“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 lowering of the value of their savings … The situation has stabilized, the ruble exchange rate has returned to the levels of the first half of February and is determined by an objective strong balance of payments, “he added. the president of the aggressor country.
What experts say about the Russian economy
U.S. President Joe Biden has said Western sanctions will remove all that Russia’s economy has added over the past 15 years, as Russia is now cut off from technology, such as importing the latest semiconductors, components for quantum technology, and secure coding of Internet transactions.
“… from everything they need to stay competitive in the 21st century. We have blocked Russia’s economic ability to grow for many years,” the American president said.
Doctor of Economic Sciences, ex-head of the European Bank for Reconstruction and Development Sergey Guriev said that Russia’s economy, which “suffers and will continue to suffer”, will face a strong downturn.
He also explained how the ruble exchange rate returned to the level before February 24, 2022.
“The ruble is controlled and no longer a convertible currency. In principle, the Central Bank can make (through various methods) the ruble exchange rate as high or low as it wants. And 70 or 80 rubles per dollar, ”a powerful economist said on his YouTube channel.
According to him, the fact that demand for imports has fallen, nothing can be bought, means that demand for dollars and euros has also fallen, which means that the ruble should strengthen.
“This is a sign that Russia’s economy is cut off from the world and shows that there is a strong ruble, which is not a reflection of the strength of the economy. In fact, it is a strengthening of the ruble associated with low demand for foreign money, due to sanctions, cut off from imports – the strengthening of the ruble is a sign that Russia’s economy is suffering and will continue to suffer, ”Guriev said.
He stressed that the situation in Russia “will be completely unfortunate”: “The economy will be subject to sanctions, GDP will fall by 10-15 percent this year, this is the biggest recession since the beginning. of the 90s. And in the future, if the recession ends, the recovery will not be quick because Russia will continue to lose to the rest of the world. “
Peeter Luikmel, an economist at the Bank of Estonia, predicts that the decline in Russia’s economy is likely to be between 10 and 20 percent.
“The country’s economy has now rolled back to where it last was in 1998, when it declared itself insolvent in rubles to domestic creditors,” the expert said.
He added that annual inflation in Russia, if current price levels continue, will clearly be double -digit, and it is possible that prices for many commodities there will also rise sharply – by more than 50 per cent.
“And as for goods, Russia will definitely start to adjust prices, as it has done in the past,” Luikmel added.
Earlier, Athletistic found out when Russia would default and what the consequences would be.
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Source: korrespondent
