Excellent performance by Russian economy despite harsh sanctions impo

Moscow/Washington: The western leaders had bragged that the harsh sanctions imposed on Russia following the invasion of Ukraine would break the Russian economy, and it would be forced to stop the Ukraine war. But the performance of the Russian economy has delivered a tight slap across the face of these leaders making such claims. There has been an increase of 50% in the Russian fuel revenues. At the same time, the Current Account Surplus over the first four months has reached a record level in the last three decades. The Russian currency Rouble has been hailed as the ‘Best Performing Currency’. Financial institutions and groups from the United States and Europe have predicted that the Russian economy has taken no major hit.

Following the Russian invasion of Ukraine in late February, the United States, European Union and allies bombarded Russia with harsh sanctions. These sanctions targeted the fuel sector, considered the mainstay of the Russian economy and almost all the other sectors like finance, banking, investment, space, and technology. Russia accused that the sanctions are nothing but an economic war started by the West and warned of aggressive retaliation. The Russian central bank initiated rapid measures to counter the effects of the sanctions on the economy. These included a ban on the sale of foreign currency, an increase in the interest rates, linking gold transactions to Rouble and transacting for fuels in Roubles.

The effects of these measures are apparent in the Russian economy, and there has been a tremendous increase in the revenues from fuel as well as the trade profits and the value of the Rouble. Russia earned revenue of a whopping USD 20 billion from fuel sales alone. The Russian crude oil export has reached 8.1 million barrels per day. Although there is a decline in the European crude oil purchase from Russia, India and China have increased their purchase. It has also been revealed that the fuel profits from the exports of other products too have increased substantially.

The profit made by Russia in the international trade between January and April has reached record levels. The Russian Current Account Surplus for these four months is USD 98.8 billion. This is a three-fold increase in the surplus as compared to the last year.

This is the first instance since 1994 that Russia has made such substantial trade profits. The position of the Russian currency also is becoming stronger. In the transactions carried out on Tuesday, Rouble was being exchanged at 62 Roubles to a USD and 65 Roubles for a Euro. In March, Rouble was traded at more than 120 Roubles for USD and Euro. Economists claim that the Rouble has been in its strongest position since 2017.

The foreign financial institutions and groups claiming that the Russian economy will collapse have changed their tones. The European Commission had said that the Russian economy will decline by 10% in the current year and will be on a path of recovery from 2023. At the same time, JP Morgan, which had predicted a 35% decline in the Russian economy, has confessed in their statement that the Russian economy is in a far better state than expected.