Economic Trends After Outbreak Of War. Is Recovery Possible?

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SPIEF will be organized in an era of great change

Despite the increasing influence of the military agenda on the information background in the world, business still plays the main role. It is the monetary component that determines the agenda, contrary to emotions and political gestures.

It should be noted that a situation similar to the one in which Russia is currently trapped has been occurring periodically lately. Economic sanctions have become the most common way of fighting against political regimes undesirable to the “civilized” West. Such countries as Iraq, Syria, Iran, Belarus and Venezuela have already been hit in this way. Sanctions have been imposed against all of these countries in defining economic sectors. Some of the most recent examples are Belarus and Venezuela. Sanctions were imposed against the former with an embargo on agricultural products, the latter with an embargo on hydrocarbons.

Despite the relative crisis state of the economies, which were indeed affected by the sanctions, the exported goods have not disappeared from the world market. Belarusian fertilizers have recently been imported by some countries (the Baltic States and Poland) in an amount almost twice as much as the pre-pandemic level. Venezuelan oil was also actively exported to foreign markets. What these situations have in common is that in both cases new commodity exchange chains were created to circumvent sanctions (mixing products from a sub-sanctioned country with a “clean” one). Most importantly, in addition to the exporting country, chains are created by the consuming country. And it is not always clear who is more interested.

The same thing is currently happening to Russia. The main sanctioned positions are energy carriers, whose share on the world market is very large. Moreover, a large number of countries called unfriendly by the Russian government continue to buy Russian raw materials. The main reason is the dependence on Russian oil and gas. For some states it was much easier not to support sanctions than to refuse Russian energy carriers.

In addition, the withdrawal of some foreign companies from the Russian market was a fairly high-profile event. The presence of foreign countries in some categories was simply irreplaceable, or the companies simply had no competitors. Particularly striking was the official withdrawal from the Russian market of the fast food restaurant chain McDonald’s. Perhaps because the population could take an extremely negative view of the absence of their favorite establishment, Russia needed to buy the rights to all of the chain’s establishments.

The latter example actively demonstrates the self-regulatory ability of the market in the current realities. When one company leaves, another seeks to take its place. For example, Russian gas, from which all the countries that refused to pay for it under the new scheme were cut off, is now gradually beginning to be exported to completely different regions (primarily Asian countries).

In this regard, despite the possible economic crisis in Russia, which may arise against the background of the withdrawal of foreign companies, business will be able to find opportunities to obtain and further increase profitable performance. In the new economic reality, the attractiveness of stand sites, where completely new products and companies are presented, increases. The 25th St. Petersburg International Economic Forum will be such an event in 2022. This platform should be the first such event in the new reality, which was formed after February 24.

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• The Economist Dispels ‘Russian Economic Collapse’ Narrative
• NATO Divided Over Support For Ukraine While Russia Creates New Economic Reality

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