Russian Numbers Collapse During Russian Economy

( On Thursday, multinational investment bank JPMorgan predicted that economic sanctions placed on Russia by the United States and Europe will cause a 35% reduction in the size of the Russian economy in the second quarter. Economists and financial experts in the bank also predicted that the economy would contract a further 7 percent across 2022.

JPMorgan strategic Anatoliy Shal issued a memo to clients all over the world, explaining how sanctions and the decisions made by foreign private businesses to pause operations in Russia “have led to a stall in international trade, reduced output, and supply-chain disruption.”

The subsequent contraction of the Russian economy was compared to the economic crisis endured by Russia in 1998 – a crisis that helped President Vladimir Putin rise to power in the first place. It could even be worse than the economic crisis in 2008.

Shal said that a peak-to-trough decline in Russian GDP is expected at 12% – which isn’t far off the 10% seen in 1998 and the 11% during 2008.

Exports in Russia could decline by 13% this year, and domestic demand for oil in Russia could even drop by around 10%.

Now the only question is whether or not Russian President Vladimir Putin considers his war in Ukraine – and his ultimate goal of regaining control of pro-Russian territories in Ukraine – as worth it. If the economic sanctions are already hurting, then perhaps Putin will see this as an opportunity to go all-in and achieve what he wants while he has nothing else to lose.

In that sense, these sanctions may prove more detrimental than they do useful.