The russian federation’s economy has already begun to contract

The russian federation’s economy has already begun to contract, and this trend will only worsen.

This is emphasized by Ilya Neskhodovskyi, the head of the analytical department of the National Interests Advocacy Network “ANTS”.

“On December 5, the ban on the import of russian oil delivered by sea went into effect – this is the first vector of oil sanctions. Let me remind you that the russian federation earns the most money from the export of oil and oil products. As a result, the ban directly impacted russian revenues. Furthermore, it is worth noting that oil sales fell by 25% even before the imposition of sanctions. As a result, the income reduction is gaining momentum. The russian budget sets the price of a barrel of oil at $70, but it already costs $50. Furthermore, oil will now take a very difficult logistical path. If it used to be that it could be in Europe in a few days, now it has to go around the European continent, pass through the Suez Canal, and the Indian Sea to reach the buyer,” – says Ilya Neskhodovskyi.

As a result of the high logistics costs that the companies will bear, the russian budget will receive nothing.

“Because the entire russian economy is based on oil and gas revenues, when those revenues cease, the “domino effect” ensues. Reduced oil production will cause problems in related industries, causing the entire chain to collapse. In general, the entire russian federation’s economic spiral was based on the injection of oil and gas revenues, which no longer exist. As a result, their economy began to contract and will continue to contract,” – according to the analyst.

Neskhodovsky is convinced that a ban on the import of russian oil by sea will have a significant impact on the aggressor’s budget.

“Oil and gas revenues are critical to them. The situation is already affecting their metallurgical, coal, and processing industries. And there is currently a coronavirus outbreak in China, with nearly a quarter of the population already sick. They close entire regions because they do not require oil, metal, or coal. As a result, russia has no other option. As a result, while everything is in our favor – including natural factors – we have the warmest winter in Europe. Regardless of how much russia wants them to freeze there now, the thermometers show a plus. The price of gas has already dropped below what it was before the start of the war, and this is not the end”.

On February 5, 2023, restrictions on the import of russian oil products will go into effect, causing the aggressor’s economy to collapse even further.

“If you don’t sell a product like fuel oil, you must halt all oil production. China and India do not require fuel oil. Europe used it, and it now refuses to use it. As a result, the worst is yet to come for them “- emphasized by “ANTS” analytical department’s head.

Ilya Neskhodovsky sees a number of positive aspects in Ukraine’s economic situation.

“With proper management of the economy, we will get excellent results at the end of the year. There are several positive aspects thanks to international support. As a result, I believe the government’s forecast of 28% inflation is overly pessimistic. Taking previous year’s trends into account, I believe this figure will be no more than 15%. Regarding the dollar rate, it is at risk of strengthening due to the influx of financial assistance. Its quality is a contentious issue. This, in my opinion, is not very good; therefore, it is critical that the NBU implements the correct policy and continues to restrain the course, even when there are strengthening factors. This will allow us to support the economy,” – the expert highlighted.

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