Russia’s economy is doomed

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https://1-re--russia-net.translate.goog/analytics/0244/?_x_tr_enc=1&_x_tr_sl=ru&_x_tr_tl=en&_x_tr_hl=en-US&_x_tr_pto=wapp

 

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In 2024, Russia's export revenues amounted to $417.2 billion, which is practically no different from the 2023 figure and the average annual value for the ten pre-war years. Russian exports appear to be invulnerable to sanctions. But in reality, this is not the case.

The paradox of Russian export resilience to sanctions is largely determined by the frontal surge in prices for a wide range of goods that form its core – metals, minerals, energy products, food raw materials and fertilizers – in the early 2020s after a period of relatively low prices in the mid-2010s. 

The outbreak of war and the introduction of sanctions only spurred an abnormal rise in prices for some of them, which more than compensated for the reduction in supply volumes and additional costs.

However, the commodity price boom of the early 2020s is now gradually fading. Costs and limited sales markets, which seemed less significant when prices were high, are becoming increasingly important factors for competition.

While prices are still above the levels of the second half of the 2010s, supply and competition are growing, creating conditions for the displacement of "toxic" Russian products, burdened with additional sanction costs. Russian coal exports are already in crisis, and metal exports are declining. Conditions for a surplus have formed on the oil market. The European energy market will be ready to completely abandon Russian raw materials in two to three years.

The main threat to the Russian economy today is not even a sharp decline in oil prices, which seems unlikely, but a smooth but frontal decline in prices and, accordingly, in income from most items of Russian exports.

Such a decline may be all the more sensitive since the transfer of the Russian economy to “war footing” has paradoxically led not to a lesser, but to a greater dependence on imports.

 

 

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