The West tries to understand why heavily sanctioned Russian economy is 'chilling'

Western analysts puzzled to see Russian economy 'chilling' amid draconian sanctions

The West is trying to understand why the Russian economy is "chilling" against the background of the crushing and draconian sanctions that have not produced the effect that the West desired.

They try to find it out in the West whether Russia has secret helpers to circumvent the sanctions. When there's a will, there's a way, but the result is surprising.

OilPrice wrote, for example, that three months after the introduction of unprecedented sanctions, the Russian economy has proved to be much stronger than expected.

Analysts at JPMorgan Chase wrote to their clients last week that business sentiment surveys are signaling a not very deep recession in Russia, and therefore imply upside risks to our growth forecasts.

"The data at hand therefore do not point to an abrupt plunge in activity, at least for now," JPMorgan's analysts wrote.

In addition, JPM has abandoned its previous forecasts of a 35-percent contraction in Russia's GDP in the second quarter and a seven percent reduction for all of 2022. Currently, the forecast for a recession in the Russian economy looks less gloomy.

In late February, the exchange rate of the Russian ruble dropped against the US dollar by almost a third. It then seemed that the Russian currency was doomed, forecasts about Russia's inevitable default were plentiful.

However, all those predictions turned out to be premature. The Russian ruble starts recovering from the collapse. According to OilPrice, Putin made a wise move when he announced the decision to introduce payment for gas in rubles for Russia-unfriendly states.

Despite tough Western rhetoric about the need to cut off energy supplies from Russia, Moscow is still selling significant amounts of oil and gas just because some of the world's largest commodity traders do not suffer from qualms of conscience about it.

Moreover, it appears that the West has found a scapegoat too — Switzerland. The Swiss authorities supported the sanctions against Russia, but it appears that this is far from being enough.

Almost 1,000 commodity companies are registered in Switzerland. The country receives enormous profit from this, even though the EU nation is located far from world trade routes and has no access to the sea.

However, taxes from Swiss-registered commodity companies account for a large part of the country's GDP — even larger than taxes from tourism or engineering.

According to a 2018 Swiss government report, the volume of trade in commodities reaches almost a trillion dollars. Needless to say that no government in the world will voluntarily give up on such revenues. Switzerland is no exception. Yet, the West will continue its search for those who made the sanctions against Russia inefficient.

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Author`s name Oleg Artyukov