New Delhi: The sanctions imposed by the US and its allies on Moscow for invading Ukraine can push Russia into recession and start to turn it back into a closed economy, a senior US Treasury official said on Friday.
In the remark, the official, who didn’t disclose his name, said the Treasury observed Russia stressed with steep inflation, dwindling exports, and shortages despite a recovery of its rouble against the dollar, news agency Reuters reported.
ALSO READ: PM Modi Meets Russian Foreign Minister, Says India Ready To Contribute In Any ‘Peace Efforts’
What’s the stance of US on Russian economy?
Going by the US official, inflation has climbed as high as 6 per cent over the past three weeks, and it remains a better indication of the impact of sanctions’ inside Russia exposing the rouble’s diminished purchasing power. He added that black market rouble exchange rates were well below the international rate.
Since the West imposed initial sanctions immobilising almost half of the Russian central bank’s $630 billion in foreign exchange assets and snapping key Russian banks from the SWIFT international transaction network, the rouble lost half its value against the dollar.
However, the currency gained back its pre-invasion value touching a five-week high on Friday before settling in the 83-84 range to the dollar.
But the Treasury official noted that it will not stop a steep contraction in Russia’s economic output that outside analysts now forecast at about 10 per centthis year, much worse than the 2.7 per cent contraction it suffered during 2020, the first year of the Covid-19 pandemic.
“The economic consequences Russia is facing are severe: high inflation that will only get higher, and deep recession that will only get deeper,” the official said.
In fact, the Treasury official stressed that the cumulative effect of the sanctions on banks, wealthy oligarchs linked to Russian President Vladimir Putin, key industrial sectors including US export controls denying Russia access to critical technologies will push Russia towards its Cold War existence as a closed economy.
The official stated that Russia, a producer of mainly commodities and raw materials, remains ill-equipped to produce its own consumer and technology goods.