Thanks to the energy manna and in spite of the sanctions, Russia resists. Full employment claimed, inflation down, recession forecasts weaker than expected: the Russian economy is showing resilience, but the challenges to be met in the longer term remain multiple.
According to a revised IMF forecast on Tuesday, Russian GDP is expected to contract by 3.4% in 2022, a far cry from doomsday international predictions in March, in the wake of the military intervention in Ukraine. The institution also noted in a report “the resilience of crude oil exports and domestic demand with increased support from fiscal and monetary policies and a restoration of confidence in the financial system”.
Russia has succeeded in “adapting”
Vladimir Putin had already boasted in September to Russian economic decision-makers of “a situation which is normalizing”, “the peak” of the difficulties being in his eyes “past”. According to him, this is reflected in particular by “an unemployment rate at its lowest”, at 3.8%, and by “a falling inflation”, at 13.7% over one year, after having broken records in the spring in the wake of the first international sanctions.
“We can estimate that the impact of the first sanctions has passed, in particular the effects on the financial sector”, recognizes Elina Ribakova, deputy chief economist at the Association of the major world banks and financial institutions (IIF). “Russia has managed to prepare for and adapt to the sanctions.”
The diplomatic and economic divide with the West has above all accelerated Russia’s rapprochement with China. Faced with a European market that is now practically unreachable, “companies are forced to find alternatives in other markets, particularly Asia and Turkey”, observes Natalia Zubarevich, economist at Moscow State University. . Moscow and Beijing have already announced that they want to pay for their gas contracts in rubles and yuan, a victory for Russia, launched in a race to “de-dollarize” its economy.
In addition, the announcement last week by OPEC + of its desire to cut its oil production sharply, to the chagrin of Washington, was also applauded with both hands in Moscow, which could benefit from a rise in prices. black gold. And the difficulties encountered by the Europeans and the G7 to cap the price of Russian oil have also chased the clouds from the skies of Moscow.
The backwardness of high value-added sectors
But structurally, the Russian economy will only find itself more dependent on the energy windfall, while the high value-added sectors will accentuate their lag. The increased isolation of international markets is likely to weigh down those who are most technologically dependent on foreign countries, because the promises of Russian alternative products are still very theoretical, when Russia cannot boast of giants like Adobe, Microsoft or Apple.
Another striking example: the lack of parts needed for assembly has plagued automobile production. In mid-September, the Japanese manufacturer Toyota thus closed its assembly plant in Saint Petersburg, due to a lack of electronic components. “About 50% of the companies affected by the sanctions still have difficulty finding alternative suppliers”, estimates Elina Ribakova. Russia has therefore decided to lower safety and environmental standards for vehicles produced in the country.
New embargo coming December 5th
In a working document from the Russian Ministry of Industry and Trade, the content of which leaked to the Russian press, officials recently expressed alarm at a “10 to 15 year” delay in the Russian technology industry, a “dependence” on foreign production and a shortage of labour.
Another source of concern: the European embargo on Russian oil, set for December 5, before that on refined products in February 2023, has not yet affected the Russian economy, which is particularly dependent on hydrocarbons. Between January and August 2022, more than 40% of federal revenue came from the sale of gas and oil, according to Russia’s Finance Ministry.