Russian economy ‘will not be what it was’, says central banker
The head of Russia’s central bank warned yesterday that the country’s economy faces foreign pressures that could persist indefinitely, dampening hopes that conditions could return to what they were before Russia sent troops in Ukraine.
“It seems to me that it’s obvious to everyone that it won’t be like before,” Elvira Nabiullina told a session of the St. Petersburg International Economic Forum, an annual gathering for investors.
“External conditions have long since changed, if not forever,” she said.
Russia has been hit with a wide range of sanctions after the start of the Ukrainian military operation, including cutting major banks from the international payment system SWIFT and banning Western flights. Hundreds of foreign companies have suspended operations in Russia or pulled out altogether.
The consequences of these actions have yet to be fully assessed.
Economic Development Minister Maxim Reshetnikov said in the same session that the prognosis was that Russia’s gross domestic product would fall by 7.8% this year, but “over the past month there has been a wave of improvement in ratings and predictions”.
Many Russian officials have tried to circumvent the sanctions by claiming that Russian companies can step in to take over.
Government funding could help these efforts, but Finance Minister Anton Siluanov has warned that such measures could be overkill.
“Now we’re hearing, ‘Let’s get more funding, let’s invest more there’… such budget medicine shouldn’t turn into narcotics,” he said.