Page 9 - RusRPTApr23

Car sales remain down 44% y/y, but even this represents a strong recovery from the July low when car production Russia came to a screeching halt.
Russia’s Economic Development Ministry upgraded its economic growth forecast for 2023 from a fall of 0.8% to some small growth of between 0.1% and 0.2%, Minister Maxim Reshetnikov said March 24. (chart) "We confirm that our expectations for this year are positive, we expect significant growth based on the figures connected with the economic development, investment, better forecasts for people's income," the minister said, as cited by Prime.
The Central Bank of Russia (CBR) also upgraded its outlook for 2023 last month from predicting a contraction to a more optimistic range of -1% to +1%.
Sanctions failing
If the goal of Western sanctions on Russia was to cripple the economy and force the Kremlin to end its war in Ukraine then they have been an abject failure. Not only have the Kremlin’s revenues not fallen, in 2022 Russia had a current account surplus of $227bn – twice the previous year’s all-time record. Russia made more money last year than at any time since the fall of the Soviet Union three decades ago.
The major impetus for the Russian economy in 2022 has been the weakness of sanctions and the willingness of many countries to act as transit routes for banned goods headed for Moscow and beyond.
There have been ten rounds of sanctions, but at each round there were significant calve outs and exceptions made as each round inflicts pain on Europe as well as Russia and recent rounds have begun to inflict more pain on Europe than they do on Russia.
In parallel to the partial nature of the sanctions, is the willingness of some countries to act as way stations in the transit of Russian goods. Reexports from Turkey to Russia boomed and shelves emptied in April as international firms like Apple and H&M left were full of the same goods by the end of the summer, but cost some 20% more to cover the costs of the traders that are now bring in them in via intermediate countries.
This has led to a new effort by the west. In March EU foreign policy chief Josep Borrell admitted that the West has run out of things to sanction and the same week European Commission President Ursula von der Leyen announced that an eleventh package was being drafted that would contain little that was new, but would focus on making the existing sanctions work better.
Western and Russian diplomats have been travelling the world recently trying to shore up support in March and bullying states into complying with sanctions with some success. In the middle of March Turkey suddenly halted trade to
9 RUSSIA Country Report Russia April 2023 www.intellinews.com