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Some interesting Russian economic numbers today - the Russian economic ministry released numbers showing 4.6% GDP growth and low unemployment (3.3%) due primarily to the war effort. Capital investment including from abroad has increased significantly. From a certain perspective, this shows some strength despite massive Western sanctions.
But underlying that growth is an ever-growing beast of inflation coupled with a growing labor shortage due to the war. Real wages grew 9.4% year over year and nominal wages increased 18% year over year. Western economic intelligence has been forecasting for months now that Russian inflation is approaching runaway speed - and presents greater and greater risk.
Putin's response to the Ukrainian incursion has been to call to expand production and spending - throwing more and more money at the problem, which introduces more and more inflationary pressure. Recently, the Russian central bank has hiked the benchmark interest rate to what is now over 18%. If you recall, the RCB imposed a temporary 20% rate after the initial invasion - an emergency measure to control the economy from spasming at the beginning of the war. That didn't last that long and the rate was well under 10% in 2023. But now, the RCB has been steadily hiking due to more systemic, long-term pressures and the rate is approaching the 20% level that was only a temporary emergency measure just two years ago.
Russian economy faces "creeping Crisis", economists warn
A Kremlin-lined think tank said Russia's war-hit economy could face turbulence in the second of 2024.www.newsweek.com
And things are getting worse. Russia is getting hemmed in.
The smoke and mirror act is losing ground. When the dam breaks, and it will, the flood will be devastating.
Nearly all Chinese banks are refusing to process payments from Russia, report says
Almost all Chinese banks, even small regional ones, are refusing to accept direct transactions from Russia, business execs have told Russian media.
www.businessinsider.com
