In a shocking admission that underscores the challenges facing Russia, its own central bank governor, Elvira Nabiullina, said on Monday that the country should brace for more economic pain in the form of additional sanctions. This admission comes amidst growing concerns about the resilience of the Russian economy and the effectiveness of its leadership in the face of mounting global pressure.
Nabiullina, speaking to the TASS state news agency, cautioned against optimism regarding Russia’s economic standing, asserting that the nation is not as robust as some may believe. She stressed the need for preparation as the pressure from sanctions is expected to intensify in the future.
The grim assessment of Russia’s economic situation gained further traction in an op-ed published in Foreign Policy on Friday by Yale researchers Jeffrey Sonnenfeld and Steven Tian.
Contrary to recent commentary portraying President Vladimir Putin as a winner amid signs of economic resilience, the researchers argued that Russia’s economy is, in fact, paralysed.
The duo pointed to Western sanctions and the exodus of multinational companies from Russia as significant factors inflicting substantial costs on the nation’s economy. They warned against underestimating the impact of such measures and emphasised the importance of maintaining effective pressure on Putin.
Among the indicators of Russia’s economic struggles, Sonnenfeld and Tian highlighted the mass migration of at least one million Russians to other countries, including top tech talent, contributing to a labour shortage nearing five million workers and driving high inflation.
Additionally, the exodus of £198billion ($253billion) in private capital from Russia between February 2022 and June 2023, as reported by the Russian central bank, underscored the economic challenges. The loss of access to Western technology and expertise, coupled with a near-complete drying up of foreign direct investment, further exacerbates Russia’s predicament.
The strict capital controls in place have rendered Russian assets valued in rubles virtually worthless on global markets, while sanctions cutting off Moscow from international finance have hindered Russian companies from issuing new stock or bonds in Western markets.
Sonnenfeld and Tian concluded by highlighting that Russia, lacking a significant contribution of finished goods to the global economy and heavily dependent on the cannibalisation of state-controlled enterprises for its war machine, is far from being an economic superpower.
