Russia had a deficit of more than USD 25 billion in January, the Russian Ministry of Finance reported today. This is the largest deficit since 1998, and it may be called surprising. The IMF recently reported that the Russian economy would grow in the coming year.
According to BNR’s house economist Han de Jong, the entire situation mainly shows that it is difficult to say anything sensible about it. “The Russian economy is currently undergoing a huge transition,” he says. ‘Western companies have left, sanctions have been imposed, Western suppliers no longer supply, Western markets are closed, so the Russians have to look for new suppliers and markets. While they are also fighting a war. That causes a huge economic blow, and economists can’t say much about that in advance.’
Also read | ‘Ammunition shortage is typical for Russian armed forces’
He does emphasize that the Russian economy did less badly in 2022 than originally feared, but that the problems have become visible in recent months. Particularly with regard to government finances.
Revenue
The reason for this lies in the revenues of the Russian government, which were disappointing. ‘This is mainly due to the lower oil price and lower gas exports’, De Jong continues. ‘That has to do with sanctions, but they also no longer want to supply us with gas. At the same time, you see a huge increase on the expenditure side, and that is in turn due to the war. So it’s a mixture of the war, deteriorating economic conditions and the sanctions.’
Also read | Russian Orthodox Church purges ranks
Putin, meanwhile, is putting pressure on the Russian central bank to lower interest rates. An interesting move, in De Jong’s opinion. “If you’re looking for signs that something is going down in an economy, this is one,” he says. “When a government starts to pressure an independent central bank to say or do things, you know they are under pressure themselves. So this is actually a bad sign for Russia.’
