Vladimir Putin leveraged the excellent numbers achieved by the Russian economy to secure his presidency.
The Russian economy continues to reserve unexpected surprises. The multiple packages of sanctions by the European Union and the United States should have weakened it, forcing Vladimir Putin to stop the military operation in Ukraine. On the contrary, the aggressive entry of the Western bloc has not achieved - at least for the moment - the desired effects.
Moscow’s economic system, rather than imploding, has adapted to the context, relying on new partners. Russia appears solid as Putin wins his fourth presidential term.
Such an exploit is also linked to the apparent excellent state of health of the Russian economy. Russia’s GDP grew by 3.6% in 2023 and the International Monetary Fund expects its economy to grow by 2.6% in 2024.
As if that wasn’t enough, unemployment is at historic lows and wages are rising dramatically even though inflation is around 7%. All these were precious arrows in the quiver of the current head of the Kremlin, ready to prolong his stay at the top of the pyramid of Russian power. The Levada Center found that Putin’s approval rating reached 85% in January.
How is the Russian economy doing
As is the case with voters around the world, “Russians vote with their wallet,” David Szakonyi, a political science professor at George Washington University, told Business Insider. “When things are really grim economically, voters tend to blame politicians, and Putin himself has suffered popularity-wise at various times over the past two decades when the economy has stuttered,” he said.
Now the economy smiles on Putin, and this is largely due to the work of Elvira Nabiullina, governor of the Russian Central Bank. Some economists argue that Russia’s war economy and lavish state spending are unsustainable in the long run. However, in the short term, massive public spending is keeping the economy afloat.
Furthermore, according to the Kyiv School of Economics, Moscow would have earned 178 billion dollars from the sale of oil in 2023, while revenues could rise to 200 billion dollars in 2024, not far from 218 billion dollars earned in 2022.
The effect of sanctions
“Russia is facing more than 16,000 sanctions: so why hasn’t its economy succumbed?” asked Canada’s CBC. Over the past two years, the Russian government has managed to overcome sanctions and limit inflation by investing almost a third of its budget in defense spending.
Moscow has increased trade with China and sold its oil to new markets, in part by using a shadow fleet of tankers to get around the price cap that Western countries hoped would reduce the spoils of the Kremlin’s war.
“I think for the next 12-18 months Putin will have enough resources to continue building his war machine,” said Alexandra Prokopenko, a former adviser to the Russian Central Bank. Russia’s dependence on China to mitigate the impact of sanctions is now such that a fifth of its imports by the end of 2022 were invoiced in Chinese yuan. In short: while the West has tried to squeeze investments in Russia, Moscow has turned to China to fill (almost) every void.
Original article published on Money.it Italy 2024-03-31 06:58:00. Original title: Perché l’economia della Russia è diventata l’arma più importante di Putin
