Russian economy taking sanctions well, for now

The Russian economy has withstood the extensive Western sanctions, which aimed to damage Moscow’s war chest. Ordinary Russians’ economic lives have been largely unchanged, with no mass unemployment, currency drops, or collapsing banks. The assortment of goods in supermarkets remains almost the same, with international brands still available, and local substitutes taking their place.

Crowds in some Moscow malls may have reduced, but not drastically. Some foreign brands such as McDonald’s and Starbucks have been acquired by local owners who renamed them, yet they still serve the same menu. Despite the sanctions, people continue to work and shop as they used to, with only a slight increase in prices.

However, the restrictions are now tightening on the Kremlin’s chief moneymaker – oil. This means that the upcoming months will be a more rigorous test of President Vladimir Putin’s economy. Although economists believe that sanctions on Russian fossil fuels are only now taking full effect, they warn that it could put a strain on government finances or cause the currency to sink.

On the other hand, some economists argue that the Kremlin has significant money reserves that have not been affected by sanctions, and links with new trade partners in Asia have quickly formed. They suggest that Russia is unlikely to run out of money this year but will instead experience a slow slide into years of economic stagnation.

While Apple has stopped selling products in Russia, the country’s largest online retailer, Wildberries, offers the iPhone 14 at the same price as in Europe. Local online retailer, Svyaznoy, also lists Apple AirPods Pro. Furniture and home goods left after IKEA left Russia are sold on the Yandex website. Despite Swiss-based Nestle ceasing to ship Nespresso coffee capsules, knockoffs are available.

Goods are being imported from third countries that aren’t penalising Russia, allowing them to skirt the sanctions. For example, Armenian exports to Russia increased by 49% in the first half of 2022. There is also an increased availability of Chinese smartphones and vehicles.