The editorial board of the authoritative publication Le Monde has concluded that the powerful Western sanctions are indeed having an impact on the economy of the aggressor country, the Russian Federation. The situation in Russia may deteriorate significantly even before the start of potential negotiations to end the war against Ukraine.
Points of attention
- Russian Railways is cutting back on investments, and the residential real estate market is nearing collapse.
- Unproductive spending on the army and police, coupled with declining oil revenues, threatens Russia's economy.
- Russia may face a major crisis even before peace talks with Ukraine.
The Russian economy cannot withstand the pressure of sanctions
It's no secret that Putin's propagandists are diligently hiding the economic consequences of the war, for example, significantly understating the official inflation rate.
Despite the fact that it is publicly stated that the inflation rate is 8.5% per annum, in fact, inflation may be twice as high. The confirmation of this assumption is quite simple, namely the astronomical 21% key rate of the Central Bank of the Russian Federation
According to economists, high real inflation and too high a key rate suppress business activity in the aggressor country.
Enterprises can no longer afford to use bank loans and are canceling large investment projects, the publication writes.
We also cannot ignore the fact that payments on previously taken loans increase every time the Central Bank raises the key rate.
The situation in Russia may soon worsen even more
Journalists draw attention to the fact that Russian Railways, the country's largest employer and a key player in the logistics market, has officially announced that it will reduce investments by 33% by 2025.
In addition, the fact of the winding down of the preferential mortgage program and the increase in interest rates on conventional loans is extremely telling.
This also indicates that Russia's residential real estate market is rapidly approaching collapse.
All this is happening against the backdrop of unprecedented spending on the unproductive part of the economy — on the army and the police. Starting next year, Russia will spend up to 40% of its budget on them. At the same time, budget revenues from oil and gas continue to decline, the editorial office of the publication emphasizes.
All of these factors will lead to Russia's "economic suicide." It is quite possible that it will happen even before peace negotiations with Ukraine.
Moscow has not yet paid for its "special operation" (this is what the Russian Federation calls the war against Ukraine — ed.), writes Le Monde.
