Russia’s economy is collapsing amid crippling sanctions, study finds

The Russian economy is on the verge of collapse as international sanctions begin to take hold, according to a Yale University study published this month.

The analysis, which the authors say is based on consumption, trade and shipping data, shows an economy in danger of collapsing as foreign companies leave and sanctions continue.

“From our analysis, it becomes clear: corporate exits and sanctions are catastrophically crippling the Russian economy,” the authors write.

“As the Russian invasion of Ukraine enters its fifth month, a common narrative has emerged that the unity of the world in resisting Russia has somehow turned into a war of economic attrition that is wreaking havoc in the west,” the study reads, adding, “This is simply not true.”

The rouble’s surprising performance in the wake of unprecedented economic isolation has been attributed by some analysts to favorable commodity markets in a country dependent on oil and gas exports.

Others pointed to Russian President Vladimir Putin’s demand that such products be purchased only in rubles, and central bank restrictions against foreign holders of Russian stocks and bonds who withdraw dividend payments from the country. .

Vladimir Poutine
Russia invaded Ukraine on February 24.
Alexey Maishev, Sputnik/AP

The Yale study, however, argues that Russia is now trading its raw materials from a weak position and has been forced to switch from sourcing most of Europe to making sub-par deals on raw materials. secondary markets.

And the authors claim that Putin’s “patently unsustainable” monetary policy has driven the Russian government into deficit.

The study claims that almost 40% of Russia’s gross domestic product was lost with the withdrawal of foreign companies from the Russian economy, “reversing almost all three decades of foreign investment”.

Yale professors also say domestic production of goods in Russia has effectively come to a halt, causing supply shortages and driving up consumer prices.

This shook confidence in the system and led to an exodus of capital and people, the authors write.

“There is no path out of economic oblivion for Russia as long as allied countries remain united in maintaining and increasing sanctions pressure against Russia,” the study concludes.

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