Western sanctions have not crushed the Russian economy because they have failed to undermine the basis of the financial system. The low share of imports in GDP has also played a positive role.
The Russian economy managed to withstand Western sanctions due to the influence of several factors, Dmitry Timofeev, Director of the Department for Control of External Restrictions of the Ministry of Finance at the Eastern Economic Forum said.
"Russia is pursuing a policy of so-called financial stability. This includes the balanced budget, which the Ministry of Finance is responsible for. The Central Bank is pursuing a policy of targeted inflation and a floating exchange rate. This made it possible to avoid a tough scenario, which the West apparently counted on. The Russian financial system worked, it continues working and will continue working,” Timofeev said.
Major financial crises occur when financial circulation is disrupted in the first place, Timofeev stated.
"Why was there such a decline in Russia after the collapse of the USSR? There was hyperinflation because money circulation was disturbed at some point, There is no market economy without money. <…> There was a major financial crisis in Greece, because the work of Greek banks was disrupted too. When you can't keep money in a bank because you don't trust them, there will be no normal economy,” he said.
The policy of financial stability is correct. The banking sector suffered 1.5 trillion rubles of losses in the first half of the year, but Russian banks are going through the crisis without much pain, First Deputy Chairman of the Central Bank Dmitry Tulin said in an interview with RBC. Most banks are going through a troubled period with sufficient capital reserves.
A relatively low share of imports in GDP is another reason that explains the resilience of the Russian economy to Western sanctions.
"We don't have much imports. If you look at GDP, it is about 20 percent. But if there are exports, there will be imports — there is no other way. The question is what we import,” Timofeev said.
According to Rosstat, in 2021, Russian imports amounted to 21 percent of GDP (for comparison, the global average was 28 percent, as per the World Bank).
Russia gradually abandons the Western financial infrastructure and switches to settlements in national currencies.
"The West has provided an important stimulation with its sanctions. It is rather dangerous to use reserve currencies now. Russia is aware of this problem, but one needs to convince partner countries of that too. I don't think it will be an easy process, but we will come to this,” he said.
The turnover of the ruble-yuan pair already outstrips the dollar. Russia has become the third country in the world in terms of the yuan exchange clearance. On September 6, Gazprom announced that it switched to payments in national currencies with China's CNPC for Russian gas supplies to China.
The current state of affairs sets the task for Russia to change the financial system around the world, because Russia will not be able to continue living the way it was living before.
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