Crushing Sanctions Cripple Russia’s Economy

Sanctions placed on Russia from western countries are accomplishing what they were intended to do — crippling Russian exports.

Combined with the falling prices of commodities as well as many European countries turning to other sources to purchase their gas, Russia’s economy is struggling.

Not long after Russia invaded Ukraine in February of 2022, the country stopped publishing their normal reports that detailed import and export statistics for the country. That’s not a surprise, as President Vladimir Putin likely didn’t want western countries to be inspired by the success of the sanctions they placed on Russia.

That being said, the Federal Customs Service in Russia released its annual data on Monday that showed the country’s exports have slumped in the last year.

Compared to the year before, export revenues in Russia for 2023 decreased by 28.3%, from $425.1 billion in 2022 to $167.4 billion last year. That’s the lowest mark for a year since before the outset of the COVID-19 pandemic in 2020.

Olga Bychkova, who works as an economist at Moody’s Analytics, commented on the report by saying:

“The oil and gas industry faces a decline in output and exports. The shift of oil and gas exports from Europe and the U.S. to Asia requires substantial investment, while alterations in the payment infrastructure will require longer lead times for payment receipts.

“The recovery of the industries affected by sanctions is further complicated by the higher cost of imports, challenges with substituting formerly imported components with domestic goods and the need to rebuild logistics chains.”

In the same time period, Russia’s imports increased to $285.1 billion, an 11.7% increase from the year before. Those two figures mean that trade turnover last year went down by 19.4% overall, to $710.2 billion.

Tass, a Russian state news agency, broke down the recent data, showing that exports to countries in Europe dropped a whopping 68% in 2023, to $84.9 billion. At the same time, imports also decreased to $78.5 billion, a 12.3% drop.

Russia compensated for that somewhat by increasing exports to countries in Asia to $306.6 billion, an increase of 5.6% from 2022. The biggest increase percentage-wise was to African countries, where exports rose 42.9% up to $21.2 billion.

Imports from African nations also reached $285.1 billion in 2023, an 11.7% increase. Year-on-year trade turnover last year decreased by 19.4% to $710.2 billion.

Essentially, sanctions on Russia that have been led by the United States have resulted in the world being divided into “friendly” and “non-friendly” countries to Moscow. Countries determined to be friendly ultimately received huge discounts on their main commodities, which resulted in big benefits felt by both India and China, for instance.

Russia has attempted to pivot its exports and imports away from western countries, but they haven’t yet been able to offset those losses by increased gains in these new markets.