Guno צְבִי
We fight, We win, Am Yisrael Chai
“A banking crisis is possible,” a Russian official told the Washington Post recently on condition of anonymity. “A nonpayments crisis is possible. I don’t want to think about a continuation of the war or an escalation.”
Russia’s economy was surprisingly resilient in the face of severe Western sanctions after President Vladimir Putin launched his invasion of Ukraine in early 2022. That’s as China and India were eager to snap up cheap Russian oil, keeping the Kremlin’s coffers full and providing revenue for its military.
But more recently, energy prices have slumped while Europe and the U.S. have tightened sanctions. Oil and gas revenue has tumbled 22% in the first 11 months of the year, and Reuters estimated that December proceeds are on pace to sink nearly 50%.
To cover the shortfall in energy revenue, Moscow has tapped its sovereign wealth fund. But that is running out now too, so the government has resorted to raising more revenue via tax hikes.
Meanwhile, a tight labor market and high inflation have forced the central bank to keep interest rates high, and recent easing has failed to prevent spending declines in several consumer categories.
With companies feeling the squeeze of high rates and weaker consumption, Russian data show unpaid wages nearly tripled in October from a year ago to more than $27 million, with the Post adding that furloughs and shorter workweeks are also becoming more common.
Russia’s economy was surprisingly resilient in the face of severe Western sanctions after President Vladimir Putin launched his invasion of Ukraine in early 2022. That’s as China and India were eager to snap up cheap Russian oil, keeping the Kremlin’s coffers full and providing revenue for its military.
But more recently, energy prices have slumped while Europe and the U.S. have tightened sanctions. Oil and gas revenue has tumbled 22% in the first 11 months of the year, and Reuters estimated that December proceeds are on pace to sink nearly 50%.
To cover the shortfall in energy revenue, Moscow has tapped its sovereign wealth fund. But that is running out now too, so the government has resorted to raising more revenue via tax hikes.
Meanwhile, a tight labor market and high inflation have forced the central bank to keep interest rates high, and recent easing has failed to prevent spending declines in several consumer categories.
With companies feeling the squeeze of high rates and weaker consumption, Russian data show unpaid wages nearly tripled in October from a year ago to more than $27 million, with the Post adding that furloughs and shorter workweeks are also becoming more common.
