Given that The West’s sanctions against Russia are intended to harm Russia’s economy, Russia’s President Vladimir Putin’s January 17th year-in-review “Meeting on economic issues” is the first credible major indication (other than the international exchange-rates of the various national currencies, which will be discussed at the end here) regarding the success or failure of these sanctions. Here are highlights from that presentation:
The Ministry of Economic Development estimates, as our colleagues will report in a bit, that Russia’s GDP decreased between January and November 2022, but only by 2.1 percent. As you remember, some of our local experts, not to mention the foreign ones, predicted a decline of 10, 15 or even 20 percent.
The expected overall annual outcome is a 2.5-percent decrease in GDP. I want to stress that this is the annual result because in the third and fourth quarters, we recorded economic growth, though against the sharp downfall in the second quarter. Our task is to bolster and maintain this positive trend.
I should note that in many of the essential backbone industries such as construction, agriculture, industrial production, the defence industry and some others, the scope of production not only remained at the same level but, on the contrary, despite the unprecedented external pressure, expanded, creating new jobs, helping maintain stability on the labour market and reducing the unemployment rate to the lowest level in modern history.
However, there are still problems with part-time jobs in some regions and in some branches, and with low wages, especially in the regions and cities where troubled economic industries are concentrated. You know that the biggest decline was recorded in the car industry and some other sectors. The Government should work in cooperation with the regions to redress this situation. The main thing is that we have every opportunity to do this – we must encourage employment and the growth of wages – real wages.
Furthermore, the defence industry is making a big contribution to the dynamics of the processing sectors. In the past year, it gained significant momentum and it is continuing to build up its capacities. Plants are working in several shifts and even around the clock. In this context, I would like to thank all defence industry workers for their intensive and responsible labour. Its significance overall and now in particular is very high. …
The situation in the timber industry complex remains difficult. In November, the processing of wood and the manufacture of wood products decreased by 21.4 percent. Plants in the northwest of Russia were the hardest hit. I believe we must discuss this issue at a separate meeting.
Now I would like to emphasise once more that it is necessary to maintain the operation of this industry and others that have been affected, to retain their work teams and provide an impetus for their development by encouraging domestic demand and intensifying the processing of raw materials in our country, at our plants and our manufacturing facilities.
Frankly, we have talked about this many times when limiting the export of roundwood. This was our goal, but not everything was finalised. We were talking about the necessity to give up the export of roundwood and raw wood and supply all of it to the domestic market and later to supply products with greater added value. Now it is necessary to expedite this process as much as possible. …
I would like to mention in particular the oil-and-gas sector. Despite the sanctions pressure, in 2022 oil production in Russia increased by about 2 percent. Overall, Russia produced 535 million tonnes of oil.
At the same time, the extraction of natural gas decreased by 11.8 percent. I would like to note that, as you know, gas prices have increased considerably because of the actions of Western countries. As a result, Russian gas producers, exporters have made a good profit in the past two years and have substantially increased their contribution to the national budget.
Overall, last year federal budget revenues went up by 10 percent to constitute 27.8 trillion rubles. That said, our expenses also increased and at a much higher rate, more noticeably – by 25 percent, exceeding 31 trillion rubles.
As a result, the federal budget deficit totalled 3.3 trillion rubles or 2.3 percent of the GDP. We mentioned this, and I also said that this deficit level is still one of the best figures for the G20. Nevertheless, it is important to work consistently to preserve the sustainability of state finances. Today, we must talk about this as well.
Now to inflation. It stood at 11.9 percent in late 2022, which is less than the Central Bank and the Government predicted and is estimated to drop below the 4 percent target in the second quarter. …
Also, the construction of housing and infrastructure is critical to improving the quality of life, promoting business activity and developing territories. We did quite well in 2022 in this regard. A record-high volume of housing – 101.5 million square metres – was commissioned which, I believe, is something we have not seen in recent history. …
THE INTERNATIONAL EXCHANGE-RATE DATA
The economic front in the war by America and its allies against Russia is 100% controlled by investors and is indisputably shown in the changes in the respective values of the currencies on the two sides: the value of the ruble relative to the dollar, and to the pound, and to the euro, today versus on 1 January 2022, which initial date was before anyone had any clear knowledge that Russia would invade Ukraine on 24 February 2022 and would promptly be hit by an all-out economic war against Russia: intense primary and secondary sanctions to create an economic iron wall between East and West, an economic blockade (by “The West”) against Russia.
In short: the major damage that The West (the U.S. and its allies) has done to Russia’s economy was when Obama’s coup in February 2014 grabbed Ukraine for The West and turned that nation on Russia’s border rabidly anti-Russian. However, Russia, since at least January of 2022, has economically gained, not lost, in comparison to America, Europe, and Britain. Thus far, Russia’s economy, as indicated in the exchange-rates, has performed, between January and now, better than America’s and far better than Europe’s and England’s has. Compared to what the ruble was worth in January 2022, just before Russia invaded Ukraine, the Ruble has increased in exchange-value against the dollar, and against the euro, and against the pound.
Public officials and ‘news’-media in The West still say that The West’s sanctions against Russia will destroy Russia’s economy. Perhaps by the end of the present year, 2023, the world will know whether The West, or whether Vladimir Putin and the Russian Government, are the more trustworthy economic predictors of the two.