Despite having suffered heavy economic sanctions from the West following its invasion of Ukraine, the Russian economy has so far managed to avoid economic collapse. Currency expert Patrick Reid told Express.co.uk that no matter how sanctioned the dictatorship is, “the end result is gas”, pointing to Germany’s special role in keeping the world afloat. Russian economy.
He said: “I think they held up remarkably well. I had my doubts that the Central Bank of Russia (CBR) backed them, but they did so successfully – without releasing real numbers on the vaults.
“But higher oil prices and gas-hungry European countries will always be the root of the macroeconomic situation in Russia.”
Last year, Russia supplied Europe with 40% of its gas, with Germany being the largest exporter. The EU said it would cut gas imports from Russia by two-thirds within a year, but stopped short of a full ban.
Member States have agreed to reduce their gas consumption by 15% over the next seven months.
In March, Andriy Kobolyev, the former head of Ukraine’s energy network, accused Germany of “waiting for Ukraine to collapse”. The country had increased the Russian share of its energy even after the annexation of Crimea, by signing an agreement to create the Nord Stream 2 gas pipeline.
In 2021, Russia exported 2021 supplies of natural gas which, based on prices at the time, brought in around £47 billion. The state-owned Gazprom, which has a monopoly on the Russian export market, is estimated to account for at least 5% of Russian GDP.
The ruble crashed to a record high against the US dollar earlier this year in the wake of the invasion as the West froze around half of Russia’s £500billion foreign currency reserves – but has since rebounded to its highest level against the US dollar since 2018. Other economic indicators also suggest that the Russian economy is recovering, with the CBR indicating that inflation, which peaked at nearly 18% in April, slows down.
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“And then, on the other hand, you have, God, they’ve been so resilient in surviving a brutal collapse and surviving until now. They still have German gas, and they still have oil.
“Russia is on par with Iran, or can surpass them on sanctions, which is extremely important. But the main thing is gas.
Mr Reid pointed out that for the Russian economy to be truly affected by the war, “some cold hard truths have to be digested by the West”.