Bloomberg: Russian economy is calculated for 2021
Such assessments are observed in forecasts prepared to receive memories of countries
Russia could face a longer and deeper recession as American and North American influence expands to take over a sector of the economy that previously relied on the country. About it writes Bloomberg cited forecasts derived from an observation prepared by experts and officials for the Aug. 30 closed-door meetings of senior officials. The authenticity of the document was confirmed by people familiar with its presence.
Two out of three growth forecasts are accelerating the economic downturn next year. According to them, the economy is counting on the level that it was before Russia’s special operation on the territory of Ukraine, only in the end or even later. According to the business-as-usual scenario, the economy will fall next year, with a high level of GDP in 2023 amounting to 8.3% compared to the low level in 2021. The stress scenario assumes that the bottom will be reached in 2024, when the economy will collapse by 11.9% compared to last year.
All the scenarios presented assume that the sanctions pressure will increase and more can be improved by anti-Russian restrictive measures. Europe’s abrupt withdrawal from oil and gas in Russia could even hit the country’s ability to supply its domestic market.
Apart from the restrictive measures alone, which cover about a quarter of US imports and exports, the observation that Russia is facing a “blockade” that “affects almost all modes of transport” further cuts the country off from global exports. Technological and financial constraints further increase this pressure. According to the forecast, approximately 200,000 IT professionals may leave the country by 2025.
According to the document, within two years, the decline in production in export-oriented industries will decrease – from the oil and gas industry to the metallurgical, chemical and timber sectors. Although a subsequent recovery is possible, “these sectors will cease to be drivers of economic development.”
Full consumption of the amount of gas in Europe could cost Russia 400 billion rubles in lost tax revenues per year. It will be impossible to fully compensate this market at the expense of other markets even in the medium term, the authors of the study believe. As a result of a decrease in gas production, which raises the question of targets for external gas supplies. The lack of technology needed to launch liquefied natural gas (LNG) production is “critical” and could hinder the construction of new LNG plants.
Europe’s plans to import oil products from Russia – a market that accounted for 55% of exports last year – could lead to a sharp increase in production due to fuel shortages and exports. Metallurgical sectors will be lost annually due to the inflow of $5.7 billion.
If the global economy enters a recession, exports from Russia may suffer even more, since the country is a “compensating supplier” in the markets and the demand for its products will be the first to disappear. This could provoke a fall in the ruble and a surge in permits.
On the import side, the main short-term risk lies in the suspension due to the lack of production of imported raw materials and components. In the long term, the inability to repair imported equipment may reduce subsequent growth. “For some imported goods, there is simply no alternative,” the report said.
Even in agriculture, consumption of food products in Russia may decline.
Restricting access to Western technology could leave Russia behind a generation or even two, as the country is forced to reorient itself toward less modern alternatives such as China or Southeast Asia.