Status: 04/18/2022 1:10 p.m
Many foreign companies have gone out of business. Moscow Mayor Sobyanin sees 200,000 jobs at risk. Central bank chief Nabiullina says the economy cannot live on reserves forever, but has to reposition itself.
Moscow Mayor Sergei Sobyanin fears that 200,000 jobs will be lost in the Russian capital. The reason is the cessation of business activities by foreign companies.
The city administration wants to support the unemployed with training and socially important tasks, writes Sobyanin in his blog.
Western sanctions against Russia have far-reaching economic consequences. Numerous companies have restricted or suspended their business in Russia or are withdrawing completely. Russia is trying to take various steps to counteract the consequences of the financial and economic sanctions and to dampen the impact on the country’s companies.
Central bank calls for new business models
The head of the central bank, Elvira Nabiullina, said the Russian economy could not live off its financial reserves forever and had to reposition itself in the face of international sanctions. She announced a phase of structural change and the search for new business models.
So far, the sanctions have mainly had an impact on the financial market. “But now they will increasingly affect the economy as well,” warned Nabiullina. 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.
Legal action is planned against the blockade of Russian gold and foreign exchange reserves imposed by the West, Nabiullina said. The foreign sanctions have frozen about 300 of the approximately $ 640 billion in gold and foreign exchange reserves.
Inflation rate at its highest level in 20 years
It will take until 2024 for the inflation rate 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.
In response to the sanctions, the Russian central bank more than doubled its key interest rate to 20 percent. However, this month it lowered it to 17 percent.
According to estimates, the Russian economy will experience a massive slump as a result of the sanctions. The major US bank JPMorgan assumes that gross domestic product could shrink by 20 percent in the second quarter. A 3.5 percent decline in Russian economic output is expected for 2022 as a whole.
Even before the attack on Ukraine and the sanctions, a downward trend in the Russian economy had become apparent.