“It reminds me of the 1990s.” West compared Russia’s economy to South Africa Bloomberg described Russia under sanctions as “a memory of the 1990s”.

Russian business has approached “creatively” in resolving issues related to the departure of a number of foreign companies after the RF Armed Forces launched a special operation in Ukraine and the imposition of Western sanctions. Bloomberg compares the current state of the Russian economy to the period after the collapse of the Soviet Union or to apartheid South Africa.

“Still, it’s more reminiscent of the 1990s, with the collapse of communism leaving gaping holes in supply chains, forcing consumers and entrepreneurs to get creative to fill those gaps.”

– writes agency.

They cite as an example Russian entrepreneurs, who, with the departure of Western companies, began to register similar trademarks and names.

“Franchisees are coping with the exit of multinationals by selling products with similar packaging and logos but slightly different names. Krispy Kreme donuts are now available at Krunchy Dream, Starbucks Stars Coffee and Pizza Hut are now available at Pizza N.

It is also stated that Russia copes with the disruption of its supply chains due to the sanctions not only through parallel imports, but also through the entrepreneurial spirit of small businesses and special offers on internet platforms.

“Craigslist’s Russian counterpart, Avito, is full of people offering to import foreign-brand clothing from abroad: call Gucci and you’ll get 173,000 listings. The authors of the publication suggest that new supply chains have emerged for the delivery of iPhones and other Western tech gadgets through the former Soviet republics. stated that he was out.

young business

The agency also interviewed several young Russian entrepreneurs who talked about their own experience of doing business under sanctions.

They tell the story of two sisters, Victoria and Yulia, who couldn’t find a neoprene water ski vest and decided to contact a Chinese manufacturer. According to Bloomberg’s report, the sisters contacted a sporting goods factory in China’s Guangdong province and sent them a request. A batch of 20 was shipped less than two months later, and they plan to order them in batches of 100 as soon as they pick the most suitable one and then sell them in Moscow.

“We think the demand will be huge and there is no competition at the moment,” Victoria said in a phone call with the agency.

Another unnamed Russian entrepreneur opened a company in Dubai with a license to import gold.

“Russian companies buy and send bullion to him, and he sells them to jewelery manufacturers in the UAE,” the article says.

According to the agency, he uses the resulting profit to run a second business – “after pocketing 40% of the profits, he uses it to buy auto parts or anything else needed, which is then relocated to Russia.”

Despite the success of Russian trade and parallel imports, Bloomberg points out that the sanctions still have a negative impact on the Russian economy. Analysts compare the current situation in the Russian Federation with South Africa from the 1960s to the 1990s, when it faced sanctions due to apartheid. Bloomberg believes the Russian economy will continue to slow as “barriers to trade and capital flows stifle competition and increase inefficiency.” The authors of the material believe that the Russian economy shrank by 2.7% last year and will shrink by another 2.5% in 2023.

“Heaviest Sanctions”

The previous day, at the WEF in Davos, European Commission head Ursula von der Leyen said that EU sanctions would weaken Russian industry by depriving it of modern technologies and would drag it into recession for decades.

“We have imposed the heaviest sanctions in history, as a result of which the Russian economy will go into recession for decades and its industry will be deprived of modern and important technologies,” he said.

At the same time, Russian President Vladimir Putin announced that the budget deficit at the end of 2022 was 3.3 trillion rubles, or 2.3% of GDP, but noted that this indicator is one of the best among the G20 countries.

He also said that last year, the dynamics of the Russian economy gave the best performance contrary to expectations. According to him, for the 11 months of 2022, GDP decreased by 2.1%, while “as predicted” decreased by 20%.

He also noted that Western sanctions against the Russian Federation not only had the predicted effect, but also caused a significant increase in world prices, including gas, which provided Russian companies with “good profits” and then expired. federal budget.

Since the end of February 2022, the EU has introduced nine packages of sanctions against Russia that affect the financial sector and the stock market, exports and imports, the international reserves of the Bank of Russia and limited opportunities for tourists, and air travel with Europe. countries. In addition, personal sanctions were imposed on Russian natural and legal persons. European officials claimed that the purpose of the restrictions was to reduce the Russian government’s ability to “finance aggression against Ukraine”, but noted that when drafting the sanctions, they sought to “minimize the negative consequences for the Russian people”.

Reuters wrote that the tenth anniversary restraining package is in development and should be released on February 24. It could include restrictions against the Russian nuclear sector and cut most banks from the SWIFT system.