12/27/2023 0 Comments Boris red rublesFor example, Chernogolovka, a producer of soft drinks, froze its investment in new production facilities for 5 billion rubles, and Severstal refused to buy a new gas turbine. Owing to the uncertainties of wartime, private companies are reducing their investment programs. At the same time, private investments are gradually being replaced by state investments and peaceful investments by military ones.Ĭommodities, Real Estate, and Advertising Construction and investment will also continue to grow. Still, Russian industry as a whole will finish 2022 without a recession. Military production helps the GDP but has only a negative impact on the population’s economic well-being. In wartime, the army needs more tanks, missiles, and shells. Previously rarely exceeding 1–2 percent of all industrial production, the output of military goods has increased in 2022 to 4–5 percent of all production. Since the beginning of 2021, according to an estimate by an economic think tank close to the Russian government, the share of weapons of undisclosed value in Russia’s industrial output has increased. Industry in 2022 avoided a recession with the rapid growth in arms manufacturing. Only the estimated decline in retail trade is close to the spring forecasts, 6%. Sanctions against Russian exports, extremely important in the medium and long term, proved ineffective in the short term because high energy prices continued to fill the state’s coffers.Īccording to the most balanced forecasts, the GDP decline in 2022 will be only 3.3–3.4 percent, inflation will level off at about 12 percent, investment will fall by about 1 percent, and the population’s real income will decline by 2–2.5 percent. The sharp decline in imports, bans on foreign currency exports, and a requirement for exporters to sell foreign currency earnings led to a sharp appreciation of the ruble, while state aid to banks and companies enabled them to keep up investment levels. Russia's GDP grew 4.7 percent in 2021, and this was another argument for a sharp recession owing to a high base effect. Investments were expected to go down by 25–28 percent and retail trade by 8–9 percent, while prices were expected to rise by 20−25 percent. In April and May most forecasters expected Russia’s GDP in 2022 to fall by 7–8 percent, while some predicted a 12–15 percent fall. Yet the Russian economy has proved quite resilient to war and sanctions. Many have lost their incomes and have had to reconsider their investments and consumption patterns. Even more people, up to 1.5−2 times as many and predominantly men, have left the country to escape the draft. According to the official count, 318,000 men were drafted, or nearly 1 percent of those liable for military service-and that figure is likely an underestimate. In the fall of 2022, the Russian army, effectively defeated in Ukraine over the spring and summer, needed a serious influx of soldiers. Russia’s brainwashed citizens are starting to suspect that the war is eating away at their well-being. Absent oil and gas revenues, the federal budget would be in deep deficit. The real estate market, demand for credit, and consumer sentiment all show a noticeable decline. The September−October enlistment drive has done to the Russian economy what the West’s sanctions have so far failed to do.
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