Russian economy showed More flexibility than US analysts expected. The critic writes about this in his note insider businessman George Glover’s photo.
“When President Vladimir Putin’s troops invaded Ukraine in late February, many Wall Street analysts were quick to predict an economic downturn in Russia.
Six months later, they had to revise these estimates.
These dire warnings seem to have come true within weeks of the outbreak of war. Western allies imposed economic sanctions, such as banning oil imports and exclusion of the Russian ruble from international currency markets.
Economic growth continues
In March, leading investment bank JPMorgan said Russia’s gross domestic product would fall 35% in the second quarter from the previous quarter.
And Goldman Sachs predicted that the Russian economy would experience its worst recession since the collapse of the Soviet Union in the early 1990s.
“However, Russia’s GDP fell only 4% year-on-year as of June 30. In fact, its economic growth contracted faster after the coronavirus pandemic hit, with GDP falling 7.4% in the second quarter of 2020.
Given this, JPMorgan concluded that the Russian economy was bearing the weight of harsh sanctions.
According to a recent note from the strategists, the available data “do not indicate a sharp decline in activity, at least not yet”. “Therefore, the GDP profile is increasingly likely to be consistent with a prolonged but not too sharp recession.”
The BI writes that stronger-than-expected exports of Russian goods, including crude oil, are helping to support the economy. According to the International Monetary Fund, the Russian Federation has also benefited from strong demand from its own consumers and a program developed by the Kremlin to reduce unemployment.
“Domestic demand is showing some elasticity, thanks to limiting the impact of sanctions on the domestic financial sector and the less-than-expected labor market,” the IMF said in July.
How did oil exports increase?
Wall Street analysts also predict that the West’s oil import bans will hit Russia, the world’s third-largest oil producer after the United States and Saudi Arabia.
As noted in the International Energy Agency’s report, the Russian economy is heavily dependent on energy exports, and oil and gas revenues accounted for 45% of the federal budget last year.
The US imposed an embargo on energy imports from Russia in March, and the EU passed a phased ban in May that currently affects 75% of Russia’s oil purchases.
Goldman Sachs said in March that Moscow is unlikely to find other partners in the crude oil trade, given that its removal from the SWIFT banking system prevents Russia’s central bank from using its foreign exchange reserves.
“An example of this is that so far no increase in Chinese purchases of Russian oil has been reported, and the People’s Republic of China has not increased its imports of Iranian or Venezuelan oil in recent years,” analysts say.
However, data shows that Russia still exports 7.4 million barrels of oil every day. Bloomberg for July.
The Observer notes that India’s purchase of Russian oil played a major role. “Commodity exports to this country rose for five consecutive months and then declined slightly in June. India still consumes 1 million barrels of Russian oil per day, 900% more than in February.
And Europe could not give up on Russian oil. According to Bloomberg data, the EU is still consuming 2.8 million barrels per day, down 30% from 4 million barrels in February.
Production and service activity revived
Wall Street has seen nothing but pain for the Russian manufacturing and service sectors due to Western economic sanctions.
“After the occupation of Ukraine, the Russian composite index, which tracks trends in these two sectors, fell. Goldman Sachs strategists said the cut was “widespread with sharp declines in production, new orders and components of new export orders in particular.” They noted that Moscow should prepare for further declines.
But a few months later, the composite index returned to its growth trajectory. This means that Russia’s economic health is booming, far from the doomsday predictions made on Wall Street.”
Against this background, the TV channel CNN Ukraine claims to be successful applied A resistance technique developed by the US Special Operations Forces to push back the Russian Federation and suppress its far superior armed forces.
From the material, “The operational concept of the Resistance was developed after the war between Russia and Georgia in 2013, but its value was realized only after the Russian invasion of the Ukrainian Crimean peninsula in 2014”.
American journalists, “Russia’s almost bloodless takeover and annexation of the occupied territories, astonishing Ukraine and the West, intensified work on how to build an all-out defense plan that would include not only the military but also the civilian population.” The later emerging doctrine proposes “an innovative and unconventional approach to war and all-out defense”.
“In terms of the comprehensive defense of the Ukrainian government, everything is in order,” said retired Lieutenant General Mark Schwartz, who was in command of the European Special Operations Command at the time the concept was developed. According to him, Kyiv is using all the resources and “some unconventional methods to undermine the RF Armed Forces.”