As Vladimir Putin spoke to a crowd in early February attending the “Everything for Victory” forum in Tula, a city 180 kilometres south of Moscow, he joked that he wanted to give the sanction-imposing West a “well-known gesture,” but wouldn’t because there were “a lot of girls” in the audience, and implied it would be rude.
Instead, the Russian president boasted about the country’s economy, and its ability to ramp up its military industrial complex, in the face of unprecedented sanctions.
“They predicted a recession, failure, collapse,” he told the crowd, which included factory employees, on Feb. 2.
“The entire economy has demonstrated resilience.”
Putin doesn’t need to campaign on the strength of Russia’s finances — he’s slated to be re-elected next week for his fifth term as president, because his serious challengers have been barred or prevented from running.
But he has happily pointed out that Russia’s economy is expected to grow 2.6 per cent this year, outpacing the G7, according to the International Monetary Fund.
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Over the past two years, Russia’s government has managed to steer through sanctions and limit inflation, while investing nearly a third of its budget in defence spending.
It’s also been able to increase trade with China and sell its oil to new markets, in part by using a shadow fleet of tankers to skirt a price cap that Western countries had hoped would reduce the country’s war chest.
“I think for the next 12 to 18 months, [Putin] has enough resources … to continue to fulfil his war machine,” said Alexandra Prokopenko, a former adviser with Russia’s Central Bank.
Alexandra Prokopenko previously worked as an adviser at Russia’s central bank, but left the country in the early days of the invasion. She is now based in Berlin. (submitted/Alexandra Prokopenko )
Prokopenko is now based in Berlin, having left her job and the country in the initial days of its full-scale invasion of Ukraine, which began in February 2022.
“There is a big debate here in Europe: What was done wrong, and what else can we do to fine-tune the sanction regime?”
Economic resilience
After Russia launched its invasion, the ruble tumbled and Western countries blocked transactions with its central bank, freezing $300 billion US in sovereign assets.
Additional sanctions have been introduced in the subsequent years: more than 16,000 since Feb. 24, 2022, according to U.S.-based Castellum.AI. Some impact the economy more than others — over 11,000 of them are aimed at individuals, and about 4,600 at entities including financial institutions. A few hundreds others are directed at ships and aircraft.
European airspace also closed to Russian planes, and hundreds of Western companies pulled out of Russia or curtailed their operations there.
But today, the latest iPhones and MacBooks are on Russia’s shelves, because the government and its businesses have been mostly able to adapt.
A customer walks past a store that sells Apple products in Moscow in March 2022. (AFP via Getty Images)
Prokopenko calls Russia’s senior central bank officials Putin’s “generals” because the president has relied on their financial leadership while navigating what she calls an “impossible tri-lemma”: funding the war, maintaining business as usual and creating macroeconomic stability.
She said the bank’s decision at the start of the war to hike its key interest rate to 20 per cent and introduce capital controls helped stabilize the ruble.
In 2023, surging food prices became a political issue in Russia, especially the price of eggs, which rose by more than 40 per cent last year, and led to shortages in some areas.
The government has since scrambled to boost the egg supply by scrapping import duties and sourcing more imports from “friendly countries.”
A woman shops for vegetables at a market in Moscow in October 2023. Rising food prices have become a political issue in Russia. (Natalia Kolesnikova/AFP via Getty Images)
“Truth be told, the prices are rising and rising, but I think it is a normal situation for all countries nowadays,” says Marina Lubanovskaya, a Moscow-based travel agent who runs a YouTube channel called Made in Russland.
Although she says eggs are now about 20 per cent more expensive in Moscow, she’s taken videos of grocery stores across Russia in a point to dispel what she calls the “rumours” circulating in Western countries.
More than 15 million people live below the poverty line, according official statistics, but she says the sanctions haven’t been crippling.
“We live with abundance.”
Her videos show full shelves at grocery stores, and an alcohol section with wine from Italy and Crimea, the latter of which Russia illegally annexed in 2014.
She admits she’s had to pivot her travel business to new markets. She previously booked trips for her Russian clients to Europe, but is now booking them to Asia.
Tilt toward China
Russia has relied on Asia, and specifically China, as a major economic lifeline.
Half of its oil and petroleum was exported to China in 2023, Russian officials say. And it became China’s top oil supplier in 2023, according to Chinese customs data.
Putin shakes hands with Chinese President Xi Jinping during a meeting at the Belt and Road Forum in Beijing in October 2023. The two countries have deepened their ties since Russia’s invasion of Ukraine began. (via REUTERS)
Chinese imports have jumped more than 60 per cent since the start of war, as the country has been able to supply Russia with a steady stream of goods including cars and electronic devices.
Trade between the two countries hit $240 billion US in 2023, an increase of over 64 per cent since 2021, before the war.
Exodus of workers
While Russia has turned to new customers abroad, at home it’s facing a labour shortage of nearly five million workers in 2023, according to its media reports.
The country’s record-low unemployment rate meant there were “practically no workers left,” central bank governor Elvira Nabiullina told lawmakers in November.
“For further growth of the Russian economy, increased labour productivity is needed.”
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Contributing to the shortage are the hundreds of thousands of people who left after the invasion began.
Araz Mamet, a U.S. citizen who was working in Moscow in March 2022, decided to leave the country along with his small team of tech workers. He set up shop at a shared workspace in Baku, the capital of nearby Azerbaijan.
New Zeon is a co-working space in Baku, Azerbaijan. (CBC News)
After a partial mobilization announcement in late 2022, he helped secure a private jet to offer others a chance to get out of Russia by booking a seat for $2,500 US.
Around 300 or 400 people asked for help. They had to cap it at 110 people, who left Russia in two separate private flights. Hundreds of others made it out to Baku on their own.
While some have since returned to Russia or moved on to other countries, a few hundred remain working out of the shared space for now.
“I believe if the situation in Russia will change, certainly the majority will go back, because they still have their properties, families and relatives,” he said.
Boosting military production
The labour shortage is particularly acute as the country ramps up military production, with some factories working around the clock in multiple shifts.
Businesses are also being re-purposed to fulfil lucrative state contracts.
According to Russian media, a bakery south of Moscow turned part of its floor space into a drone production facility.
Three malls in the city of Izhevsk, which lies 1,000 kilometres east of Moscow and is already home to weapon maker Kalashnikov, have been taken over by drone manufacturers.
Military vehicles are pictured at a plant, which is part of Russian missile manufacturer Almaz-Antey, in Saint Petersburg in January 2023. (SPUTNIK/AFP via Getty Images)
Russia’s ability to keep churning out weaponry and using its oil money to finance it is a pressing problem for Ukraine, which is grappling with a weapons and ammunition shortage, as well as its allies.
But there are no easy steps left when it comes to tightening the sanction regime, Prokopenko says.
“It’s a mouse and cat game.
“Any delays in terms of taking decisions about additional sanctions gives Russia the opportunity to adjust its policy and its economy.”
OTTAWA – The federal government is expected to boost the minimum hourly wage that must be paid to temporary foreign workers in the high-wage stream as a way to encourage employers to hire more Canadian staff.
Under the current program’s high-wage labour market impact assessment (LMIA) stream, an employer must pay at least the median income in their province to qualify for a permit. A government official, who The Canadian Press is not naming because they are not authorized to speak publicly about the change, said Employment Minister Randy Boissonnault will announce Tuesday that the threshold will increase to 20 per cent above the provincial median hourly wage.
The change is scheduled to come into force on Nov. 8.
As with previous changes to the Temporary Foreign Worker program, the government’s goal is to encourage employers to hire more Canadian workers. The Liberal government has faced criticism for increasing the number of temporary residents allowed into Canada, which many have linked to housing shortages and a higher cost of living.
The program has also come under fire for allegations of mistreatment of workers.
A LMIA is required for an employer to hire a temporary foreign worker, and is used to demonstrate there aren’t enough Canadian workers to fill the positions they are filling.
In Ontario, the median hourly wage is $28.39 for the high-wage bracket, so once the change takes effect an employer will need to pay at least $34.07 per hour.
The government official estimates this change will affect up to 34,000 workers under the LMIA high-wage stream. Existing work permits will not be affected, but the official said the planned change will affect their renewals.
According to public data from Immigration, Refugees and Citizenship Canada, 183,820 temporary foreign worker permits became effective in 2023. That was up from 98,025 in 2019 — an 88 per cent increase.
The upcoming change is the latest in a series of moves to tighten eligibility rules in order to limit temporary residents, including international students and foreign workers. Those changes include imposing caps on the percentage of low-wage foreign workers in some sectors and ending permits in metropolitan areas with high unemployment rates.
Temporary foreign workers in the agriculture sector are not affected by past rule changes.
This report by The Canadian Press was first published Oct. 21, 2024.
OTTAWA – The parliamentary budget officer says the federal government likely failed to keep its deficit below its promised $40 billion cap in the last fiscal year.
However the PBO also projects in its latest economic and fiscal outlook today that weak economic growth this year will begin to rebound in 2025.
The budget watchdog estimates in its report that the federal government posted a $46.8 billion deficit for the 2023-24 fiscal year.
Finance Minister Chrystia Freeland pledged a year ago to keep the deficit capped at $40 billion and in her spring budget said the deficit for 2023-24 stayed in line with that promise.
The final tally of the last year’s deficit will be confirmed when the government publishes its annual public accounts report this fall.
The PBO says economic growth will remain tepid this year but will rebound in 2025 as the Bank of Canada’s interest rate cuts stimulate spending and business investment.
This report by The Canadian Press was first published Oct. 17, 2024.
OTTAWA – Statistics Canada says the level of food insecurity increased in 2022 as inflation hit peak levels.
In a report using data from the Canadian community health survey, the agency says 15.6 per cent of households experienced some level of food insecurity in 2022 after being relatively stable from 2017 to 2021.
The reading was up from 9.6 per cent in 2017 and 11.6 per cent in 2018.
Statistics Canada says the prevalence of household food insecurity was slightly lower and stable during the pandemic years as it fell to 8.5 per cent in the fall of 2020 and 9.1 per cent in 2021.
In addition to an increase in the prevalence of food insecurity in 2022, the agency says there was an increase in the severity as more households reported moderate or severe food insecurity.
It also noted an increase in the number of Canadians living in moderately or severely food insecure households was also seen in the Canadian income survey data collected in the first half of 2023.
This report by The Canadian Press was first published Oct 16, 2024.
