Vladimir Putin is heading for ‘economic oblivion’

Sanctions have had a disastrous impact on Russia’s economy, new study shows, despite Moscow’s efforts to downplay them.

Vladimir Putin chairs a meeting on the development of the country's metallurgical sector via a video conference at the Kremlin this week. Picture: AFP

Sanctions have had a disastrous impact on the Russian economy with the country headed for “economic oblivion”, a study by Yale University has found, despite Moscow’s efforts to downplay the repercussions of the invasion of Ukraine.

Although President Vladimr Putin’s government had raked in billions of dollars from energy sales at inflated prices since the invasion on February 24, indicators from other sectors suggested much domestic economic activity had ground to a halt, the study found. The exodus of international business and a slump in exports belie the claims that its economy remains robust and is winning the “war of economic attrition”.

A Ukrainian soldier holds a Next Generation Light Anti-tank Weapon (NLAW) that was used to destroy a Russian armoured personal carrier north of Kyiv. Picture: AFP

Experts at the Yale School of Management used consumer data from Russia’s international trade and shipping partners to measure economic activity five months after the invasion. “The findings of our comprehensive economic analysis of Russia are powerful and indisputable: Not only have sanctions and the business retreat worked, they have thoroughly crippled the Russian economy at every level,” the report said. “Russian domestic production has come to a complete standstill with no capacity to replace lost businesses, products and talent.”

Russia has halted or censored the release of official economic statistics, including trade figures, issuing only favourable, cherry-picked statistics, but the authors studied wider data to establish a fuller picture.

A military operator walks past 300 reconnaissance drones, bought in the frame of the program 'The Army of Drones' set up ready for test flights in the Kyiv region, this week. Picture: AFP

They found that Russia’s status as a commodities exporter had suffered irreversible damage. Imports had all but collapsed, with the country facing crippling shortages of talent, parts and technology. Even crucial imports from China, which had offered political support to Mr Putin, had fallen by more than half.

“The hollowing out of Russia’s domestic innovation and production base has led to soaring prices and consumer angst,” the report said.

About 1000 companies have pulled out of Russia since February, taking with them business equivalent to 40 per cent of GDP and affecting up to five million jobs, the study found. Data on industrial production in June showed a contraction of 4.5 per cent in manufacturing compared with the same month last year, but several sectors witnessed a serious slump. Car production was down 89 per cent year-on-year.

The report was released as the first ship carrying Ukrainian sailed through Turkey. Russia has tried to strangle Ukraine’s economy by blockading the country’s ports.

This photograph taken this week shows the Sierra Leone-flagged cargo ship Razoni carrying 26,000 tonnes of corn, off shore of north-west Istanbul. Picture: AFP

The Times