Page 21 - RusRPTFeb24

2.8 Russia’s economy faces sanctions stresses in 2024
External environment has become dramatically less supportive for the Russian economy and critical buffers are coming under pressure, Kyiv School of Economics (KSE) said in its latest Russia Chartbook released on January 24.
The most important change to Russia’ macroeconomic situation over the past twelve months has been the sharp deterioration of its external balance. In 2023, total goods exports reached $423bn, a decline of 29% vs. the previous year, report KSE analysts Benjamin Hilgenstock, Yuliia Pavytska and Vira Ivanchuk.
This has contributed to much smaller trade turnover in 2023 ($118bn, -63%) and current account surpluses ($50bn, -79%) that is fundamentally eroding macroeconomic stability.
As a result of sharply lower inflows of foreign currency, the ruble has lost ~40% of its value against euro and US dollar since the autumn of 2022. In turn, this has increased inflationary pressures and forced the CBR to hike interest rates by cumulative 850 bps as well as reintroduce capital controls.
Signs of stepped-up energy sanctions enforcement having impact. Following a period during which the price cap’s shortcomings had become apparent and threatened the overall effectiveness of the energy sanctions regime, coalition authorities have stepped up enforcement measures, including by modifying the ineffective attestations system and by imposing sanctions on entities as well as vessels involved in price cap violations.
The data shows that widespread violations of the oil price sanctions continue. In October-December 2023, more than 98% of Russian seaborne crude oil exports were likely sold above $60/barrel. At the same time, close to one third of the total volume was shipped with the involvement of G7/EU service providers. This points to very low compliance with the price cap, likely via falsified pricing information (i.e., attestation fraud).
21 RUSSIA Country Report February 2024 www.intellinews.com