Impoverished by half: the consequences of sanctions for the Russian economy are named

Inflation at the end of the year could be 50-100%.

International partners are already preparing the fourth package of economic sanctions against Russia. It is becoming more and more isolated. >

Today, the Russians are about 2 times poorer. Within a week they will conditionally win three times. If earlier their GDP was 1.4 trillion dollars, then in a day it conditionally decreased to 800 billion dollars.

Oleg Getman, Economist, specialist of the Economic Expert Platform

The collapse of the ruble

Back in mid-February, Russians could buy and sell dollars at a rate of about 75 rubles per dollar. But already on Monday, February 28, the exchange rate reached almost 200 rubles. In particular, in Tinkoff bank it was at the level of 192 rubles per dollar.

At the same time, the official rate of the central bank froze at the level of 100 rubles per dollar. These figures can be seen in exchange offices, but they do not have currency. According to Oleg Getman, Russians are in a panic — they are trying in every possible way to withdraw rubles and convert them into any other currency.

This situation will worsen, the panic of the population is already there and it will increase. And, accordingly, inflation will begin after the devaluation.  may reach 50-100% by the end of the year. It all depends on how the situation develops further,
— the expert predicts.

In Russia, they are desperately trying to keep the ruble exchange rate:

• Key rate(we call it the discount rate) doubled to 20%. The Central Bank explained that this is for the benefit of the people, because now deposits will become more profitable. But there «forgotten» add that at the key rate, the rates on loans and mortgages will also increase, and it will also become more expensive to attract investments. True, the last point may not worry the Russians, because now there are few investors who are ready to invest in Russia.
• Russian exporters are now forced to sell foreign currencyreceived for their goods and services. We are talking about 80% of the proceeds.

But, according to the economist Hetman, such steps will only accelerate inflation even more. And no one will force exporters to sell a dollar for 100 rubles when on the black market it's 200 rubles each. They simply won't bring revenue to Russia, but will keep it abroad.

The collapse of shares of Russian companies

On Monday, not only the ruble collapsed, but also the shares of Russian companies. And it is not surprising, because the EU countries, the USA, Canada, Great Britain and other countries imposed severe sanctions on Russian banks and companies: they froze their assets abroad and banned any transactions with them.

Consequently, trading on the London stock exchanges opened with a collapse and even bankruptcy of some Russian companies:

• Russian Sberbank shares collapsed by 75%;

< li>TCS Group (owner of the bank «Tinkoff») fell by 78%;

• «Gazprom» – by 60%;
• NOVATEK – by 54%;
• «Rosneft» — by 45.5%.

But the Moscow Exchange did not open at all.

It was impossible to open it. Everyone would just try to sell all the shares of all companies.  For Russia, this would be akin to a collapse in 2008 on the American stock exchange,
— Oleg Getman drew an analogy.

Frozen reserves

The situation with the ruble exchange rate could be partially saved by Russia's gold and foreign exchange reserves, which number  $640 billion. Euros, dollars, pounds sterling, yen and so on are represented there. But these assets fell under the sanctions of Ukraine's international partners. Now the Central Bank cannot enter the market and sell the dollar to hold back the exchange rate, because the dollar is simply disappeared on their orders. There is also the euro, the pound sterling and some other currencies.

This is perhaps the best thing that has been done. Thanks to foreign exchange reserves, the central bank can extinguish the panic in the foreign exchange market. And this is exactly what Russia was not allowed to do today, because it was precisely parts of the gold and foreign exchange reserves that could have caused this panic today were blocked repay,
— explains economist Oleg Getman.

Disconnection from SWIFT

Ukraine fought for a long time on the diplomatic front to disconnect Russia from the SWIFT system and, finally, it succeeded. EU countries, USA, Canada and Japan supported this step. Now preparations are underway. True, at first, not all of Russia, but individual banks may be turned off.

Russia has an alternative system — SPNF.We started working on it back when the first proposals to turn off Russia were heard. SPNF works on the same principle as SWIFT. But it is not capable of becoming a full-fledged alternative, since it is purely for internal use.

The main task of SWIFT is guaranteed secure transactions between all countries of the world and all banks. And this is precisely what cannot be repaired,
— explains Oleg Getman.

Russia will be forced to throw back decades and use the old methods of sending payment documents and messages. They are slow and unreliable.

What is SWIFT

SWIFT is an international interbank system for transmitting information and making payments. It are used by more than 11,000 financial institutions in over 200 countries and territories to send secure payment orders. More than 300 leading banks and organizations are SWIFT users in Russia.

What to expect next

If these crushing sanctions do not stop Russia, then Europe and other countries of the world have several more trump cards in their arsenal.   a ban on buying them from Russia. It is this raw material that makes up almost 50% of the country's GDP.

This monster can only be finished off in one way. European countries and preferably part of Asian countries should find other sources of supply, and they actually exist,
convinces the economist.

Europe can buy oil from Asia, and gas from the USA. The oil embargo will not only finish off Russia economically, but will also rid Europe of Russian influence. Recall that President Zelensky in his addresses actively asks the world to agree to such step.

And it looks like the world is listening. The German chancellor has already announced that his country will give up Russian gas. It is important to understand that Germany is the most dependent European state from Russian energy resources.

What sanctions have been imposed on Russia: briefly

• Blocking technology exports, which will limit Russia's ability to develop the military and aerospace sectors;
• Sanctions on the largest Russian banks;
• Sanctions against the elite, including against Putin and Lavrov;
• Sanctions against the largest companies and the government: they cannot attract investments abroad;
• Frozen 40 % of foreign exchange reserves;
• Any transactions with the Central Bank are prohibited.