World Desk, AnyTV, Washington
Published by: Harendra Chaudhary
Updated Mon, 28 Feb 2022 07:50 PM IST
Summary
Russia’s economy is worth $1.5 trillion. According to World Bank data, it is the 11th largest economy in the world. But Russia’s GDP has grown only marginally in recent years. During this time Russia’s economy has become more dependent on the export of crude oil.
Western countries first imposed sanctions on Russia in 2014, when Russia annexed Crimea. But the restrictions imposed this time are much stricter than them. Meanwhile, the biggest decision is to exclude many Russian banks from the international payment system – SWIFT. Russian stock markets fell sharply due to the latest sanctions. At the same time, the value of the Russian currency ruble has also fallen against the dollar. But experts say that Russian President Vladimir Putin was aware of these restrictions. That is why his government has already made preparations to counter them.
Russia’s economy is worth $1.5 trillion. According to World Bank data, it is the 11th largest economy in the world. But Russia’s GDP has grown only marginally in recent years. Russia’s economy has become more dependent on crude oil exports during this period. Russia has benefited from the increase in crude oil prices for the last two years. For this reason, it currently has foreign exchange reserves of $ 630 billion.
Russia was collecting foreign currency
David Lubin, Associate Fellow at the British think tank Chatham House, has called Russia’s economy a ‘fortified economy’. He told American TV channel CNN that Russia had been collecting foreign currency for the past few years so that it could spend them when sanctions hit. He has done this job well. According to experts, this amount is currently being used by Russia. When Russia invaded Ukraine last week, apprehensive people queued up at ATM machines, according to Russian news agency Tass. Despite this, the problem of cash did not arise.
But economists say Putin’s policy of a “fortified economy” may have been successful in averting the crisis immediately, but it may not succeed on the investment and productivity front. This will have an impact on the overall economic growth rate. The average income of ordinary Russian citizens has declined since 2014. Today it is at the same level as it was in 2010.
This time the restrictions are historic
The sanctions now imposed by the US and European countries are aimed at stagnating the Russian economy in the long term. According to officials of the Joe Biden administration of America, the assumption is only an illusion that the Russian economy will survive the effects of sanctions. A senior official told CNN- ‘Forex reserves of more than $ 600 billion will be powerful only if Putin is able to use them. Such sanctions have been imposed on Russia, so that it will not be able to buy anything with its foreign currency.
Western officials claim that the kind of sanctions imposed on Russia has never happened in history. Lika Korhonen, head of the Bank of Finland’s Institute for Emerging Economics, said: “I don’t think we’ve seen this kind of action before.” Russia was already preparing for this. Now the price of crude oil in the international market has reached around $ 100 per barrel. This will increase the income of Russia. With that, he will handle the impact of the sanctions for the time being. But in the long run the rate of its growth will slow down.
Expansion
Western countries first imposed sanctions on Russia in 2014, when Russia annexed Crimea. But the restrictions imposed this time are much stricter than them. Meanwhile, the biggest decision is to exclude many Russian banks from the international payment system – SWIFT. Russian stock markets fell sharply due to the latest sanctions. At the same time, the value of the Russian currency ruble has also fallen against the dollar. But experts say that Russian President Vladimir Putin was aware of these restrictions. That is why his government has already made preparations to counter them.
Russia’s economy is worth $1.5 trillion. According to World Bank data, it is the 11th largest economy in the world. But Russia’s GDP has grown only marginally in recent years. Russia’s economy has become more dependent on crude oil exports during this period. Russia has benefited from the increase in crude oil prices for the last two years. For this reason, it currently has foreign exchange reserves of $ 630 billion.
Russia was collecting foreign currency
David Lubin, Associate Fellow at the British think tank Chatham House, has called Russia’s economy a ‘fortified economy’. He told American TV channel CNN that Russia had been collecting foreign currency for the past few years so that it could spend them when sanctions hit. He has done this job well. According to experts, this amount is currently being used by Russia. When Russia invaded Ukraine last week, apprehensive people queued up at ATM machines, according to Russian news agency Tass. Despite this, the problem of cash did not arise.
But economists say Putin’s policy of a “fortified economy” may have been successful in averting the crisis immediately, but it may not succeed on the investment and productivity front. This will have an impact on the overall economic growth rate. The average income of ordinary Russian citizens has declined since 2014. Today it is at the same level as it was in 2010.
This time the restrictions are historic
The sanctions now imposed by the US and European countries are aimed at stagnating the Russian economy in the long term. According to officials of the Joe Biden administration of America, the assumption is only an illusion that the Russian economy will survive the effects of sanctions. A senior official told CNN- ‘Forex reserves of more than $ 600 billion will be powerful only if Putin is able to use them. Such sanctions have been imposed on Russia, so that it will not be able to buy anything with its foreign currency.
Western officials claim that the kind of sanctions imposed on Russia has never happened in history. Lika Korhonen, head of the Bank of Finland’s Institute for Emerging Economics, said: “I don’t think we’ve seen this kind of action before.” Russia was already preparing for this. Now the price of crude oil in the international market has reached around $ 100 per barrel. This will increase the income of Russia. With that, he will handle the impact of the sanctions for the time being. But in the long run the rate of its growth will slow down.