The Russian economy remains under high inflationary pressures

As of June 24, the Russian-Ukrainian war has been going on for 119 days. From the data, the Russian economy and finance have not experienced the expected sustained collapse in the context of various economic and financial sanctions.

The current ruble exchange rate has hit a four-year high, not only recovering to the pre-February 24 exchange rate but also appreciating significantly from the previous level.

According to reports, only fossil raw material export revenue increased by 66 billion US dollars after Russia invaded Ukraine. The Russian Ministry of Economic Development expects Russian commodity exports to drop from 493.8 billion US dollars in 2021 to 482.4 billion US dollars in 2022. Imports will fall from 304 billion US dollars to 251.9 billion US dollars in 2022.

In the short term, Russia avoided the impact of the financial crisis from Russia’s natural gas; oil is necessary for Europe and the world, and Russia settled in rubles, opening a gap in dollar economic sanctions. 

But by the end of this year and beyond 2024, Russia is under pressure from Europe to stop buying Russian oil and gas. Although other countries can buy, paying in euros and dollars will face account restrictions, buyers may be fewer and fewer, and the pressure will increase.