Western sanctions on Moscow are working, says Russian economy veteran
Global News
After imposing the most strict sanctions on Russia in modern history, western countries and their allies are now preparing to limit usage of Russian oil and gas.
Russia’s economy was on track to expand by five to six per cent in 2022 had Western sanctions not derailed growth for years and ushered in a period of technological stagnation, Russian economy veteran Oleg Vyugin told Reuters.
Vyugin said there had been no catastrophe, with the sweeping sanctions imposed against Moscow over the conflict in Ukraine being only 30 to 40 per cent effective as Russia has found ways to overcome restrictions, but he warned of serious problems should Russia’s soaring export revenues fall.
“If there were no sanctions, the Russian economy could have grown six per cent this year,” Vyugin, who served as deputy finance minister and deputy central bank governor during his career before he retired from a Moscow Exchange post this year, told Reuters in an interview.
“In January-February one could see a very strong takeoff coming. It turns out that there is a negative effect. Instead of five per cent growth, we got a fall of four per cent, so sanctions work.”
Russian officials have been at pains to praise Russia’s economic strength in the face of sanctions.
President Vladimir Putin expects GDP to decline just two per cent this year, a more optimistic forecast than his economy ministry expectation of around a three per cent decline, but much improved on the World Bank’s April expectations of a 11.2 per cent collapse
Russia’s current account surplus – the difference in value between exports and imports – more than tripled year-on-year in the first eight months of 2022 to a record US$183.1 billion, as revenues soared while sanctions caused imports to plunge, although the central bank expects it to shrink in the second half of the year.
Vyugin said the outlook was gloomy with no end to the conflict in sight.
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