What’s Going On Here?Reports out this week suggest Russia’s hiding a scary economic outlook behind a strained smile. What Does This Mean?Russian officials would have you believe their sanction-loaded economy is doing just fine and dandy, but the cold, hard paperwork tells a different tale. A (seemingly not very) confidential document warns sanctions could cause a long recession, especially if more countries join Europe – Russia’s main export market – in boycotting the country’s goods and energy (tweet this). What’s more, Russia can’t even import replacement parts for its western equipment, which’ll stunt its growth by forcing it to rely on less advanced alternatives from Asia instead. That’s the brawn gone, and the brains might follow: the report also estimates that 200,000 tech specialists could flee to unsanctioned soil by 2025. No wonder, then, that two of the report’s three scenarios show the economy shrinking even faster next year to bottom out 12% lower than in 2021. What’s more, they predict the economy could take over a decade to recover. Why Should I Care?Zooming in: Cross your fingers.
Plucky Russia’s still shooting for its “target scenario”, which would see its economy bounce back pretty quickly. There’s hope: the report suggests measures that could give the economy a leg up. Not much hope, though: the country’s already tried many of those steps over the last decade, and they couldn’t stop its economy stagnating before sanctions came in – let alone in an environment like today’s.
The bigger picture: Heavy metal.
Russia’s metal producers are really taking a beating: they’re already losing nearly $6 billion a year as restrictions take their toll, and metal prices are slipping lower as countries cut their hauls in the face of a global recession. That’s not great for anyone: copper and steel are now languishing about 30% and 50% below their highs from earlier this year, and their multi-purpose bragging rights tend to mean they reflect global economic health pretty well. | 