Russia’s economy was on track to expand by five to six per cent in 2022 had Western sanctions not derailed growth for years and ushered in a period of technological stagnation, Russian economy veteran Oleg Vyugin told Reuters.
Vyugin said there had been no catastrophe, with the sweeping sanctions imposed against Moscow over the conflict in Ukraine being only 30 to 40 per cent effective as Russia has found ways to overcome restrictions, but he warned of serious problems should Russia’s soaring export revenues fall.
“If there were no sanctions, the Russian economy could have grown six per cent this year,” Vyugin, who served as deputy finance minister and deputy central bank governor during his career before he retired from a Moscow Exchange post this year, told Reuters in an interview.
“In January-February one could see a very strong takeoff coming. It turns out that there is a negative effect. Instead of five per cent growth, we got a fall of four per cent, so sanctions work.”
Russian officials have been at pains to praise Russia’s economic strength in the face of sanctions.
President Vladimir Putin expects GDP to decline just two per cent this year, a more optimistic forecast than his economy ministry expectation of around a three per cent decline, but much improved on the World Bank’s April expectations of a 11.2 per cent collapse
Russia’s current account surplus – the difference in value between exports and imports – more than tripled year-on-year in the first eight months of 2022 to a record US$183.1 billion, as revenues soared while sanctions caused imports to plunge, although the central bank expects it to shrink in the second half of the year.
Vyugin said the outlook was gloomy with no end to the conflict in sight.
“Numbers can be varied, but the main result of sanctions is that the economic growth process in Russia has been interrupted for several years,” he said.
“While export revenues are high, the economy receives very strong support,” he said. “If exports are strongly restricted … this will cause serious harm and we will see the next cycle of falling GDP.”
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After imposing the most strict sanctions on Russia in modern history, including cutting some of its top banks from the global financial system, western countries and their allies are now preparing to limit usage of Russian oil and gas.
Meanwhile, China is reaping the rewards of cheaper energy supplies from Russia, as Moscow looks east in search of alternative markets.
Vyugin expects some sanctions impact to be felt with a delay, namely in the technology sector, where the reliance on imports is high.
Industry sources told Reuters last month that Russian airlines, including state-controlled Aeroflot, had started to strip jetliners to secure spare parts they can no longer buy abroad because of sanctions.
“The world will move forward, but Russia will only use some second-grade technology and spend huge resources to recreate what there already is in the world, but can’t be imported,” Vyugin said.
“If the situation doesn’t change, Russia will see a gradual decline in the level of technological development.”
TORONTO – Strength in the base metal and technology sectors helped Canada’s main stock index gain almost 100 points on Friday, while U.S. stock markets also climbed higher.
The S&P/TSX composite index closed up 93.51 points at 23,568.65.
In New York, the Dow Jones industrial average was up 297.01 points at 41,393.78. The S&P 500 index was up 30.26 points at 5,626.02, while the Nasdaq composite was up 114.30 points at 17,683.98.
The Canadian dollar traded for 73.61 cents US compared with 73.58 cents US on Thursday.
The October crude oil contract was down 32 cents at US$68.65 per barrel and the October natural gas contract was down five cents at US$2.31 per mmBTU.
The December gold contract was up US$30.10 at US$2,610.70 an ounce and the December copper contract was up four cents US$4.24 a pound.
This report by The Canadian Press was first published Sept. 13, 2024.
OTTAWA – Statistics Canada says wholesale sales, excluding petroleum, petroleum products, and other hydrocarbons and excluding oilseed and grain, rose 0.4 per cent to $82.7 billion in July.
The increase came as sales in the miscellaneous subsector gained three per cent to reach $10.5 billion in July, helped by strength in the agriculture supplies industry group, which rose 9.2 per cent.
The food, beverage and tobacco subsector added 1.7 per cent to total $15 billion in July.
The personal and household goods subsector fell 2.5 per cent to $12.1 billion.
In volume terms, overall wholesale sales rose 0.5 per cent in July.
Statistics Canada started including oilseed and grain as well as the petroleum and petroleum products subsector as part of wholesale trade last year, but is excluding the data from monthly analysis until there is enough historical data.
This report by The Canadian Press was first published Sept. 13, 2024.
TORONTO – Canada’s main stock index was up more than 150 points in late-morning trading, helped by strength in the base metal and energy sectors, while U.S. stock markets were mixed.
The S&P/TSX composite index was up 172.18 points at 23,383.35.
In New York, the Dow Jones industrial average was down 34.99 points at 40,826.72. The S&P 500 index was up 10.56 points at 5,564.69, while the Nasdaq composite was up 74.84 points at 17,470.37.
The Canadian dollar traded for 73.55 cents US compared with 73.59 cents US on Wednesday.
The October crude oil contract was up $2.00 at US$69.31 per barrel and the October natural gas contract was up five cents at US$2.32 per mmBTU.
The December gold contract was up US$40.00 at US$2,582.40 an ounce and the December copper contract was up six cents at US$4.20 a pound.
This report by The Canadian Press was first published Sept. 12, 2024.
