Penalties are effective from 30% to 40%.
- A former financial official told Reuters that sanctions against Russia were effective between 30 and 40 percent.
- But Oleg Fusion said the sanctions will hamper Russia’s economic growth for several years to come.
- The Russian technology industry will also be affected by the sanctions, as it is dependent on foreign imports.
Former Finance Minister and Central Bank official Oleg Fusion told Reuters on Tuesday that Western sanctions against Russia over the invasion of Ukraine were 30% to 40% effective, but headwinds were coming.
His comments come as the Russian economy continues to appear resilient for nearly seven months under trade restrictions. Vyugin, who was Deputy Finance Minister and Deputy Governor of the Bank of Russia, added that Russia has taken measures to overcome the challenges posed by the sanctions. He retired from the Moscow Stock Exchange this year.
While the sanctions have not been fully effective, Fuogen told Reuters, “The main consequence of the sanctions is that the process of economic growth in Russia has been disrupted for several years.”
Fusion said the country’s economy started strong in January and February and could have been on track for a 6% expansion in 2022 had it not been sanctioned. But he told Reuters there was now a “negative impact,” adding that “the sanctions are working.”
As it stands, the Russian economy contracted 4% year-on-year in the second quarter of 2022 — its first full quarter after the war began. A government official said earlier in September, according to Reuters, that Russia’s Ministry of Economy expects GDP to shrink by 2.9 percent in 2022. This is much lower than the World Bank forecasts: it expects a contraction of 11%.
There could be more problems ahead for Russia as the European Union – Russia’s largest customer – abandons its heavy dependence on Russian energy, with most crude oil imports due to be banned by the end of 2022.
Fugin said there would be “serious damage” to the economy if Russian exports falter.
The situation does not look good on the import front either, as the shortage of some products is likely to hit the Russian industry severely. This will apply to the technology sector, as Russia relies on imports, Fuogen told the news agency.
“The world will advance, but Russia will only use some second-tier technology and spend huge resources to recreate what is already in the world, but cannot be imported,” Fuogen said. “If the situation does not change, Russia will experience a gradual decrease in the level of technological development.”
Reuters reported in August that Russia’s state-owned airline Aeroflot had already begun stripping parts from operating aircraft due to supply shortages due to sanctions.