Russian consumers have cut their spending by a tenth as western sanctions begin to take effect, new figures suggest.
Data from Russia’s Sberbank, analysed by Capital Economics, showed spending was down 9.7% in real terms at the start of April compared with last year.
The Telegraph reports analysis from the World Bank predicting Russia’s economy could contract by 11.2% this year.
President Putin’s former chief economic adviser, Andrei Illarionov, has said that a “real embargo” on Russian energy would double or even triple the number of Russians living in poverty, currently estimated to be 20 million.
Recent manufacturing surveys point to a 20% fall in factory output in March compared with the same month in 2021, according to Capital Economics.
According to the Express, prices of staples in Russian stores have risen rapidly after inflation hit 20% in the country.
By mid-March, the price of sugar alone had climbed by 37%, with other produce also rising, including tomatoes (8.2%), cabbage (6.4%), and carrots (5.5%).
Manufacturing firms have also seen their output decrease to their lowest rates in years, according to the S&P Global Purchasing Managers’ Index.
The index scored 44.1% in March, marking the “sharpest” contraction in recent years. Any score below 50 indicates a shrinkage of productivity.
‘Financial death penalty’
Western governments have unveiled more punitive measures in recent days, including:
- Restrictions on more Russian banks
- UK ban on Russian oil and coal imports by the end of 2022
- US ban on exports to three Russian airlines including Aeroflot
- EU import bans worth €5.5bn on various goods such as wood, seafood and liquor
- Sanctions on Russian President Vladimir Putin’s children
Daleep Singh, a White House deputy national security adviser, who has helped forge the US’ sanctions, told NPR that banking sanctions were “the equivalent of the financial death penalty to the largest financial institution in Russia”.
Sberbank, which has had assets that touch the US frozen, holds about one-third of the total assets in Russia’s banking system.
Ukraine GDP to half
The World Bank has also predicted that Ukraine’s GDP will almost half this year, falling by 45%.
Many countries surrounding Ukraine could suffer severe hardship, with some pushed to seek outside help from international agencies, the Guardian reports.
Ukraine’s economy, which depends heavily on agriculture, could be hit further if all access to the Black Sea is cut off by Russian forces. Ukraine’s ports have already suffered a fall in traffic of more than 75%.
Sanctions mean that the number of ships arriving in Russian ports is also down by almost half.
World Bank vice-president Anna Bjerde said Ukraine needed “massive financial support immediately”.
The bank has sent almost $1bn of assistance to Ukraine and has promised a further $2bn in the coming months, reports the BBC.