The Russian economy is on the verge of crumbling as international sanctions begin to take hold, according to a Yale University study released this month.
The analysis, which the authors say is based on consumer, trade and shipping data, shows an economy in danger of collapse as foreign businesses leave and the sanctions continue.
“From our analysis, it becomes clear: business retreats and sanctions are catastrophically crippling the Russian economy,” the authors write.
“As the Russian invasion of Ukraine enters into its fifth month, a common narrative has emerged that the unity of the world in standing up to Russia has somehow devolved into a war of economic attrition which is taking its toll on the west,” the study reads, adding, “This is simply untrue.”
The ruble’s surprising performance in the wake of unprecedented economic isolation has been attributed by some analysts to favorable commodities markets in a nation linking on oil and gas exports.
Others have pointed to Russian President Vladimir Putin’s demand that those commodities be purchased only in rubles, and the central bank’s restrictions against foreign holders of Russian stocks and bonds taking dividend payments out of the country.
The Yale study argues, however, that Russia now trades its commodities from a position of weakness, and has been forced to pivot from supplying most of Europe to striking sub-par deals in secondary markets.
And the authors claim Putin’s “patently unsustainable” monetary policy has driven the Russian government into deficit.
The study claims that nearly 40% of the Russian Gross Domestic Product has been lost with the retreat of foreign businesses from the Russian economy, “reversing nearly all of three decades’ worth of foreign investment.”
The Yale professors also say that domestic production of goods in Russia has effectively ground to a halt, causing supply shortages and driving up consumer prices.
That’s rocked confidence in the system and driven an exodus of capital and people, the authors write.
“There is no path out of economic oblivion for Russia as long as the allied countries remain unified in maintaining and increasing sanctions pressure against Russia,” the study concludes.