Economic Collapse of a Nation: Russia

 Economic Collapse of a Nation: Russia 

Soli Kothari 

In the last few weeks, we were witness to Russia launching military action to invade Ukraine. This has caused Russia's economy to collapse with companies pulling out left and right and various nations putting sanctions on Russia diminishing the value of their ruble to around $.01. So how did Russia's economy fall in just weeks and will they be able to recover? 

The United States and Europe are seeking to remove Moscow from the WTO (world trade organization) along with banning many of the popular Russian imports such as seafood and vodka. Along with that Russia will face higher tariffs and blockades on any of its exports. 

Along with that hundreds of iconic corporations have seized business in Russia including: Netflix, Visa, Apple, and Mcdonalds. As you can assume this has had a huge impact not just on the economy, but on Russian citizens as well who are now not able to watch their favorite shows, use their credit cards, and eat at the most popular fast-food restaurant in the world. 

This has caused the Kremlin and the Banks of Russia to make substantial economic efforts to stop the ruble's value from diminishing even more. These actions include: stopping exports of grain, banning currency exchange, and limiting the amount of money the Russian citizens can take out of the bank at a time. 

It’s evident that Russia will continue to get poorer and technologically decline for the foreseeable future and for the citizens this means a tough road ahead with fewer choices for products and less control over price.

In order to try and aid the failing economy, the Russian Kremlin has altered its traditional market economy to a command economy with full government control over pricing. Along with that they are breaking patents and replicating corporations that have seized manufacturing in their country breaking a handful of laws. They are also seizing company assets with foreign ownership of more than 25% and selling them to Russian investors in an attempt to kick start their economy. 

https://www.bloomberg.com/news/articles/2022-03-11/two-weeks-into-war-russian-economy-rarely-fared-worse-than-now

So is the Russian economy going to recover? In its current state, it is safe to say that the Russian economy is going to get way worse before it gets any better. Russia has severed ties with many substantial trade partners and that has resulted in a decrease in standard of living and a steep decline in GDP with it already falling by 9%(graph above). For the Russian economy to have any chance of being revived it will need to rebuild its foreign relations and re-enter the trade game. With that being said there is no timeline for how long it could take for those relationships to be rebuilt and until then Russia's economy will continue to suffer.

Works Cited

“Decline in an Economy.” Bloomberg.com, Bloomberg, www.bloomberg.com/news/articles/2022-03-11/two-weeks-into-war-russian-economy-rarely-fared-worse-than-now. 

Evers-Hillstrom, Sylvan Lane and Karl. “Russia's Efforts to Salvage Economy Could Have Devastating Impacts.” The Hill, The Hill, 13 Mar. 2022, thehill.com/policy/finance/economy/597923-russias-efforts-to-salvage-economy-could-have-devastating-impacts/. 

Hess, Maximilian. “What Will Russia's Post-Invasion Economy Look like?” Opinions | Al Jazeera, Al Jazeera, 31 Mar. 2022, www.aljazeera.com/opinions/2022/3/31/russias-post-invasion-political-economy.