Economy needs 1.5 years to adjust to sanctions : Russian Central Bank
When the economy reaches a new equilibrium, economic activity will begin to recover, according to the Russian Central Bank.
Despite severe Western sanctions imposed on Moscow in the aftermath of the war in Ukraine, the Central Bank of Russia stated, on Monday, that the economic adjustment process could take up only 1.5 years.
In the draft Monetary Policy, the bank said that “the Bank of Russia assumes that the restrictions imposed will remain as forecast. The process of economic adjustment to these may take up to 1.5 years".
The bank also stated that aggregate and potential output will fall during this time period, while prices will be more flexible and inflation will rise temporarily.
When the economy reaches a new equilibrium, economic activity will begin to recover, as per the bank.
The bank believes that the Russian economy will face unprecedented Western sanctions as a result of Moscow's special military operation in Ukraine.
It also forecasted a 4-6% decline in GDP in 2022 and a 1-4% decline in 2023. Inflation will fall to 5-7% in 2023 and close to 4% in 2024.
Since the beginning of the war on February 24, 2022, the US and the EU have multiplied punitive measures to isolate Russia by targeting its banking system, and freezing the assets of its leaders, and its industries.
Russia is winning in the energy markets: Bloomberg
According to Bloomberg columnist Javier Blas, Russia is winning in the energy markets as it takes the opportunity to cope with West-led sanctions while on the other hand, the European Union may face an energy crisis in the fall.
Blas explained that last month, Russia's oil output returned to pre-war levels, producing around 10.8 million barrels a day.
In March and April, Western politicians through that OPEC - which is led by Saudi Arabia and the UAE - would simply dump their alliance with Russia, but the case has been the opposite, according to Blas, dubbing the situation as Russia's political success.
Russia can even do without revenue by restricting its gas sales to Europe as the continent prepares for a massive retail energy price increase and shortages.
"The next phase of our work will be to take apart Russia’s ‘war machine’ piece by piece by disrupting their military-industrial complex and its supply chain," said Adeyemo in a virtual discussion organized by the Peterson Institute for International Economics.
However, the numbers have been showing the opposite: Last month, the euro fell in parity with the dollar, inflation plagues Europe and the continent's strongest economies are collapsing. Europe has been the strongest US ally in the West-led war on Russia.