War in Ukraine to wipe out 15 years of Russian economic growth

In today’s time media plays a more lethal role, as compared to weapons. The conventional media, controlled by the West, spreads disinformation by portraying bleaker outlook for the country under the US sanctions.  One such example is the details about Russia released by Institute of International Finance.

According to Institute of International Finance (IIF), Russia is likely to erase 15 years of economic gains by the end of 2023 after its invasion of Ukraine spurred a multitude of sanctions and prompted companies to pull out of the country.

The economy is expected to contract 15% in 2022, followed by a decline of 3% in 2023, leaving gross domestic product where it was about fifteen years ago. This was written by economists Benjamin Hilgenstock and Elina Ribakova in a preliminary assessment of the impact of the war, noting that further sanctions may change their view.

“Sharply lower domestic demand is likely to play a crucial role, while a collapse in imports should offset lower exports, leading to a marginally-positive contribution from net foreign demand,” the economists wrote.

“However, should further sanctions in the form of trade embargos be implemented, exports might fall more than we currently forecast.”

Russia’s invasion of Ukraine in February 2022 spurred a collapse of its currency (ruble) and threw global supply chains and commodities prices into chaos. This also sparked mass departure of companies from the country. French automaker Renault SA is among the latest firms to pull out, announcing that it will halt operations at its Moscow plant. It is also considering the future of a longstanding Russian venture called AvtoVaz.

Even after the immediate hit to Russia’s economy, the economy will suffer for years to come from a “brain drain” the exodus of educated, middle class Russians with the financial means to leave the country.

Sanctions from United States and European Union, which control export of technology, including microelectronics, will also hinder technological development in Russia for years, according to the IIF.

At the same time, “self-sanctioning” by foreign companies which no longer want to do business with Russia will lead to a weakening of important sectors of the Russian economy, the report said.

 “The negative effect on medium- and long-term economic prospects could be even more important,” the IIF economists wrote.