Sanction work – The Russian economy is weaker than Moscow

Despite superficial stability, structural weaknesses are deepened, an analysis of the Stockholm Institute of Transition Economics (site) presented on Tuesday. The background is the switch from a war economy and the effects of Western sanctions. The report was made as background material for the Minister of EU Finance.

“The tax stimuli of the war economy kept the economy about water in the short term,” said the report. “However, the dependence on opaque financing, a distorted distribution of resources and shrinking financial buffers make you in the long term. In contrast to the Kremlin, the time does not play for Russia.”

Doubts about the reliability of Russian economic data
Site director Torbjörn Becker expressed doubts about the reliability of Russian economic data before the press. If inflation is really at nine to ten percent, why has the central bank set an important interest rate of 21 percent, he asked. “If our central banks were to do something like that, they would get off their work the next day.” If you start inflation too low, overestimate the economic output (GDP). There are also inconsistencies in the household. “A large part of the war financing runs through the banking system. If you were added to the budget figures, your deficits would be about twice as high as in the official statistics.”

Since the start of the war in February 2022, the EU has imposed 16 sanctions packages against Russia, aimed at the most important sources of income such as oil and natural gas. The US, Canada, Great Britain, Japan and other countries have also introduced punitive measures. These are intended to maintain the ability of Russia to maintain its aggression war against Ukraine. Economic pressure is also justified by trying to convince the government in Moscow to talk to peace.