Chronicle of world’s economic war against Russia: Economy runs out of reserves

Author

Valery Moiseev

After the attack on Ukraine, Russia faced economic problems and sanctions imposed by a lot of countries and international organizations. The authorities of the Russian Federation call it an economic war. has prepared a compilation of the latest reports about this as of April 18th.

Economy

Russia expects a spike in prices for "some goods" in the second and third quarters, when the transformation of GDP will take place, said the Chairman of the Central Bank. According to her, the period of the economy's existence based on reserves is almost over: it will be necessary to change its structure and look for new business models.

The reserves left after the sanctions fail to control the situation with the currency on the Russian market, the head of the Central Bank said. "We have the opportunity to manage about half of the reserves, but these are gold, yuan and other non-sanctioned assets. But they do not allow to manage the situation with the currency in the domestic market."

Food manufacturing companies asked the Russian government not to ban European trucks from entering the country. They are afraid that this decision will leave the industry without imported ingredients.

The share of foreign investment in Russian real estate in the first quarter of 2022 reached a record low – 1.8%. By the end of the year, the level may drop to almost zero.

Due to falling demand for large-size packaging, Russian cardboard manufacturers are reducing production by 25%.

In Russia, economic statistics and corporate data have begun to be removed from public view. It poses risks in terms of an objective assessment of economic processes in the country, economists and analysts say. Closed information will make estimates more subjective and complicate forecasting.

There may be difficulties with the Superjet 100, which the Russian government considers basic for flights abroad, due to a shortage of components. If the situation with engine repairs does not change, one of the airlines will have to stop flights on Superjets in the autumn. By the end of the year, about half of Superjet's fleet of 150 aircraft could be shut down.

The mayor of Moscow said that around 200,000 may lose their jobs as foreign companies have terminated operations or decided to leave the Russian market. The authorities of the capital and the federal budget will allocate 3.36 billion rubles to support them.

Russian mobile operators will operate without equipment for a year or two, experts say. Foreign vendors do not want to lose the Russian market, but they will not risk it. The Russian market is not big, and if sanctions are violated, there is a risk of being banned from working in other, more attractive markets.

About 1,000 Russian railroad cars en route to Kaliningrad were arrested in Lithuania. About 30 tanks got stuck in Finland during transit to Kaliningrad. Railway workers also complain that the ferry crossing from Ust-Luga to Kaliningrad has reached its maximum capacity.

Sanctions

The Head of the European Commission announced the preparation of the sixth package of sanctions against Russia. It will affect, in particular, the banking sector and energy. Russia's demand to pay for gas in rubles could result in a de facto embargo on Russian gas supplies to Europe.

The European Union may reduce its dependence on imports of Russian energy resources much earlier than expected, said the Italian Prime Minister. According to him, Italy, which receives about 40% of gas from Russia, is proposing that the EU limit the price of gas.

Austria can give up Russian gas in just a few years, the Chancellor said. This country is 80% dependent on supplies from Russia.

The largest chemical concern BASF believes that Germany is not able to quickly replace gas supplied from Russia. "30-40% of imported gas to the EU and 50% in Germany is supplied by Russia. And these volumes cannot be replaced now."

Society

The cost of housing rent in Russia is declining amid the volatile situation and declining demand. To attract tenants, the owners began to provide discounts, split the insurance deposit, allow renting housing with pets, and others.

The operator Megaphone decided to sell used and refurbished smartphones. The population's interest in used equipment is growing amid the crisis.

Despite general trend

The refusal to impose sanctions against Russia after other Western countries comes at a price for the Serbian authorities, President Aleksandar Vučić said. "If we introduced them, it would cost us our principle, because we know that it is immoral and does not bring results."