Putin has been preparing for them for nearly 10 years

• Russia has been preparing for sanctions since 2014 after annexing the Crimean crisis.

• Moscow has already been hit by a series of Western-led sanctions after the annexation.

• Since then, Russia has protected itself by various means.

Economists Implosion However, three and a half months after the war, Russia held up in President Vladimir Putin’s economic system after the West attacked Russia with sanctions over the invasion of Ukraine. President Putin announced on June 7 that inflation has slowed and the unemployment rate has stabilized.

It helps Russia to be an energy superpower still posting Bumper sales income Thank you for the soaring crude oil prices. Even without a plunge in energy, Russia could be buffered from sanctions in the short term. That’s because the country has taken sanctions since 2014, when it was hit by a trade-restricted raft. Illegal annexation of Crimea From Ukraine.

Putin “turned the Russian economy into a fortress” to survive external shocks, American Bankers Association (ABA) Posted by ABA Banking Journal on June 13th.

Some experts are asking questions Reliability of Russian statistics Since the beginning of the war. “The Russian government clearly has an incentive to try to hide the economic implications of Western sanctions,” said Andrew Rosen, a fellow of the Center for Strategic and International Studies’ European, Russian and Eurasian programs.

Even if the economy is holding up as it looks, Russia could eventually run out of time when commodities stagnate and western sanctions grab the system. But so far, the country has shown unexpected resilience from a variety of measures, including filling its reserves and pulling away foreign capital.

This is what Russia has done to protect its economy from sanctions.

Moscow fills reserves and hides gold

Before the invasion, Russia had the fifth largest foreign currency in the world, with gold reserves worth about $ 630 billion. Bank of Finland Institute for Emerging Economics. “This stockpile can cover the government’s balance sheet and support the ruble,” Karion wrote.

The story continues

Russia lost access to about half of that amount due to sanctions, Minister of Finance of the country Said in March. However, a lot of physical gold is still hidden in this country. It is also the second largest producer of precious metals in the world.

Russian Holding gold According to it, it has tripled since 2014 and they are all stored in the vault at home. Central Bank. The United States has approved Russia’s trading with gold, but it still cannot stop “opportunistic nations” from trading with Moscow, Karion wrote.

Russia also continues to fill some reserves in the form of emergency funds, thanks to the plunge in oil and gas sales.of April When June, Added $ 12.7 billion to emergency reserves. These funds will be used to ensure stable economic development in sanctions. Reuters Reported on June 9, citing a statement from the Russian government.

Russia breaks away from foreign capital and repays debt

Beyond savings, Russia has continued to break away from foreign capital for the past eight years by actively paying off its debt. Jean Maria Millage Ferretti wrote, March 3, Senior Economics Researcher at Hutchins Fiscal and Monetary Policy Center. He added that the country is now a net creditor of the international market.

“Vladimir Putin is allergic to borrowing money,” said Andrew Wyeth, a Russian expert at the Carnegie International Peace Fund. NPR’s “Money Planet” During February. “He doesn’t want to take advantage of Russia’s banking system or access Western capital to make Russia great.”

Russia’s external debt is fairly low. The government borrowed about $ 39 billion in foreign currency bonds at the end of 2021. JP Morgan Estimated. In comparison Greece The default sovereign debt in 2012 was € 205.6 billion ($ 277.5 billion).

Russia’s overall government bonds are only 17% of GDP. This is well below the three-digit numbers in many developed countries, mostly in rubles. Therefore, the country “doesn’t really have to rent,” wrote Anton Tabakh, chief economist at the Russian rating agency Expert RA. Carnegie Endowment for International Peace June 15th website. US national debt is about 130% of GDP per capita. Statista.

The biggest problem Russia currently has is limit Added Tabakh, caused by sanctions. Once that is resolved, Russia and its businesses will be able to repay their debt, and the country’s own resources “should be sufficient to cover the needs of budgets, banks and businesses,” he added.

Russia is inward to be economically self-sufficient

Hassan Malik, a senior sovereign analyst for Boston-based investment, has turned inward as Russia has become an international paria, but as a huge producer of commodities, growth is slow and low. He said the economy would not collapse completely. Management consultancy Loomis Sayles.

“Russia is one of the few countries in the world to engage in a closed economy,” Hassan told insiders. He mentioned the concept of economic self-sufficiency. The country is a major producer of crude oil, natural gas, wheat and metals such as nickel and palladium.

To counter Outflow of international companies The Russian entity that brought their goods and services with them has taken over the company and replaced their products with homemade products.

For example, the city of Moscow and the Russian state support group took over Business of French car maker Renault The mayor, Sergei Sobianin, said the plan was to revive the Soviet-era car brand with domestic manufacturing facilities for a nominal amount of 2 rubles (3.5 cents). Blog post..

But Russia’s economic situation will still be very difficult. Putin himself said on June 9 that replacing imported goods with locally produced goods was “not a panacea.” AFP report. He said Russia would seek new trading partners and continue to develop its own industry for “very important technology.”

The scope and scope of current sanctions far exceeds those imposed in 2014, so it will “impose very severe costs on the Russian economy”. Written Millesiferetti In his March 3rd post.

Russian economy It is expected to shrink by 8.5% in 2022 and further by 2.3% in 2023. International Monetary Fund Forecast in April report. This will be the biggest downturn in the economy since the years following the collapse of the Soviet Union in 1991.

Read the original article Business insider