Western Sanctions Hit Russian Economy Hard (Yale Study)

The impact of Western sanctions on the Russian economy is far greater than official figures show, according to a study by Yale University, which makes “China’s front” seem unrealistic. BFM TV.

The study’s authors say Western sanctions against Russia after its invasion of Ukraine have created a “war of economic attrition that backfires on the West.” Or even the ‘prosperity’ of the Russian economy”. These Yale School of Management experts denounce Russian President Vladimir Putin’s “selective statistics” and say, “It’s not true”.

However, according to their analysis, “company departures and sanctions are crippling the Russian economy in the short and long term.” For example, sanctions discourage many companies and countries from continuing to trade with Russia. The country is struggling to get spare parts and raw materials or to acquire some essential technologies. The picture is bleak: “Despite the illusions of self-sufficiency and import substitution (…), Russian domestic production has completely stopped and is not capable of replacing lost companies, products and talent.”

“Volatile Finance and Monetary Interventions”

Companies that have left the country “represent about 40% of its gross domestic product, canceling foreign investment for nearly three decades,” the study’s authors say. To compensate for these weaknesses, Vladimir Putin is “resorting to unsustainable fiscal and monetary interventions”, and the Kremlin’s finances are “in a more desperate situation than it admits”. As for Vladimir Putin’s “pivot toward China,” it is based on “unrealistically optimistic assumptions.”

“Russia is a small trading partner for China, (…) and most Chinese companies are not at risk of violating US sanctions,” say the authors of the study. They also point out that Chinese companies “lack many of the upstream technologies needed to maintain and maintain Russian oil and gas supplies.”

According to the International Monetary Fund, Russia is doing better than expected this year, with gross domestic product shrinking 6.0% in 2022, according to its latest forecast released on Tuesday, well below the 8.5% decline the organization expected in April. But the recession in 2023 is expected to be stronger than expected (3.5% instead of 4.7%).

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