Ukraine war: Russia was on verge of economic ‘collapse’ after ‘stupid’ Western sanctions last year, Kremlin says

Russia admitted that its economy was on the brink of ruin last year, but it’s claiming now that it has beaten sanctions and is on track for strong growth this year, despite economists’ projections in light of persistent restrictions on its economy.

“There was a threat of a collapse, we really had to mobilise all resources and internal forces in order to prevent this collapse,” Kremlin spokesman Dmitry Peskov said to Russia’s state-run news agency TASS on Sunday.

That economic pressure was largely brought on by sanctions following Russia’s invasion of Ukraine, Peskov added.

Kremlin spokesman Dmitry Peskov said his country’s economy was in ruins following Western sanctions. Photo: TASS via Reuters

The sanctions included cutting Russia off from around US$300 billion in foreign exchange reserves, booting some of its banks from the important SWIFT network, and implementing a ban and a US$60 price cap on Russian oil, one of the nation’s top revenue sources.

But the nation has successfully recovered and is now entering a growth stage, Peskov said. The Kremlin is now predicting that Russia could grow as much as 3 per cent this year, above of the 2.2 per cent projected by the International Monetary Fund.

“Thanks to the rather insightful and wise decisions of the country’s leadership, thanks to the titanic work of the government, it was possible to reach a plateau, stabilise [the economic situation] and then, in an absolutely unexpected way, enter a growth trend,” Peskov added.

The statement is a rare acknowledgement of the effectiveness of sanctions by officials in Russia, who have put up a show of defiance amid the West’s trade restrictions. In 2022, Russian President Vladimir Putin described key Western measures, like the US$60 oil price cap, as “stupid,” and vowed to retaliate by slashing oil production, which threatened to send prices higher.

Despite claims of strong economic growth in Russia, experts and observers have expressed doubt over the country’s economic future, with the nation flashing signs of financial trouble as it plans for a record-high military budget in 2024.

Critical sectors, like Russia’s auto industry, have nearly completely collapsed over the past year. Meanwhile, inflation continues to rage, and central bankers are scrambling prop up the value of Russia’s rouble, which has plunged over the past year.

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Russia could be headed for a grim future as its economy continues to deteriorate from its war against Ukraine, some experts have said.

Russia’s economic projections are also based on cherry-picked data, according to two Yale researchers, who have proposed that the nation’s economy could be teetering on the edge of collapse as the war consumes all available resources.

Article was originally published from here

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