According to the central bank, the Russian economy cannot live on its financial reserves forever and must reposition itself in the face of international sanctions. “The period in which the economy can survive on reserves is finite,” Central Bank Governor Elvira Nabiullina said Monday. A phase of structural change and the search for new business models starts already in the spring and summer.
Until now, the sanctions have mainly had an impact on the financial market. “But now they will also increasingly affect the economy,” Nabiullina warned. The main problems are probably the import restrictions and the more difficult logistics in foreign trade. Export restrictions are also likely to have an increasing impact.
“Russian manufacturers will have to look for new partners and logistics options or switch to producing products from previous generations,” says Nabiullina. The exporters, in turn, should look for new customers. “All this will take time,” the central banker said.
Inflation at highest level in more than 20 years
It’s not all clear about inflation. It will take until 2024 for inflation to reach the target of four percent again. At 17.49 percent, it is currently at its highest level in more than 20 years, as almost everything has become more expensive since the Russian invasion of Ukraine began — from sugar to vegetables to smartphones and clothing.
The central bank is considering making the sale of foreign exchange earnings by exporters more flexible, Nabiullina announced. So far, they have had to convert 80 percent of their foreign exchange earnings into the national currency, the ruble. The issuance of digital rubles should also be tested. This should allow Russians to make transfers between digital wallets. The start of the first pilot projects is planned for the second half of the year.
In response to the sanctions, the Russian central bank has more than doubled its key rate to 20 percent. This month, however, it lowered it to 17 percent.
Source: Krone
I’m Wayne Wickman, a professional journalist and author for Today Times Live. My specialty is covering global news and current events, offering readers a unique perspective on the world’s most pressing issues. I’m passionate about storytelling and helping people stay informed on the goings-on of our planet.
