- The sanctions against Russia have been 30 to 40 percent effective, a former tax official told Reuters.
- But sanctions will hamper Russia’s economic growth for many years to come, Oleg Vygin said.
- Russia’s tech industry will also face sanctions as it depends on foreign imports.
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Western sanctions against Russia were 30% to 40% effective in invading Ukraine, but there will be headwinds, Oleg Vygin, a former senior finance minister and central bank official, told Reuters on Tuesday.
His comments come as Russia’s economy has appeared resilient to trade sanctions for nearly seven months. Russia has taken action to address the challenges posed by the sanctions, said Vyugin, who was deputy finance minister and deputy governor of the Bank of Russia. He retired from the Moscow Stock Exchange this year.
Although the sanctions were not yet fully in place, Vygin told Reuters that “the main consequence of the sanctions is that the economic development process in Russia has been disrupted for many years.”
Vugin said the country’s economy strengthened in January and February and was on track for 6% growth in 2022 if not approved. But there is now a “negative effect,” he told Reuters, “so the restrictions are working.”
Currently, the Russian economy has shrunk by 4% per year in the second quarter of 2022 – the first full quarter since the war began. According to Reuters, Russia’s economy ministry expects GDP to fall by 2.9% in 2022, a government official said in early September. This is significantly lower than the World Bank projects: it is expected to shrink by 11%.
There could be more trouble for Russia as the European Union – Russia’s biggest customer – reduces its heavy reliance on Russian energy and bans most crude oil imports until the end of 2022.
Vygin said the economy would suffer “serious damage” if Russian exports fell.
The situation is not looking good on the import front either, as the shortage of certain products will hit Russian industry hard. That applies to the tech sector, where Russia is dependent on imports, Vygin told the news agency.
“The world will evolve, but Russia will only use second-rate technology and devote enormous resources to re-creating what the world already has but cannot import,” Vygin said. “If the situation does not change, Russia will see a gradual decline in the level of technological development.”
Russian state airline Aeroflot has started dismantling spare parts from planes already in service amid supply shortages due to sanctions, Reuters reported in August.
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