Russian business confidence plunges

 Up till now, Russian economic data (at least those that the government continues to publish) have held up quite well.  This has led some commentators to conclude that the government is fudging the stats, which is entirely possible.   Business confidence (seasonally adjusted) plunged in February 2022 when Russia invaded Ukraine, then rallied, but has fallen again this year as the oil price cap and plunging gas sales have started to bite, which is at least consistent with the probable path of the economy.  The government has stimulated the economy with fiscal measures as well as cutting interest rates, and the imposition of tight exchange controls and the prohibition of foreigners selling Russian property and shares have all held the economy up, so that the year-on-year fall in GDP in Q3 was "only" 3.7%.   

Oil and gas revenues fell 40% year-on-year in January:

Russia’s revenues from oil and gas exports dropped by nearly 40% in January as price caps and Western sanctions squeezed the proceeds from Moscow’s most lucrative export, the International Energy Agency said on Tuesday.

Russia’s oil and gas export revenues were $18.5 billion in January, 38% lower than the $30 billion Moscow received in January 2022, a month before its invasion of Ukraine, according to IEA numbers shared with Reuters.

IEA Executive Director Fatih Birol said Western measures targeting Russian energy exports had achieved their aims of stabilising oil markets and reducing Moscow’s revenues from oil and gas exports.

“Our expectation is that this oil and gas revenue decline will be steeper in the next months to come. And even more steep in the mid-term, as a result of the lack of access to technology and investment,” Birol told Reuters.

International restrictions imposed on Russia in response to the Ukraine war, including a $60 a barrel crude price cap imposed by Group of Seven countries, have left Russia’s Urals blend being sold at a heavy discount to Brent.

The 27-country European Union also banned Russian seaborne oil imports from December, and has placed sanctions on exports to Russia of technologies needed for oil refining. The United States and Britain have also imposed restrictions on Russian oil imports.

[Read more here]

Only 7% of Europe's oil now comes from Russia.  Building new pipelines, to sell gas into other markets, is possible, but will take years.  And oil and gas make up most of Russia's exports (the government has stopped publishing these data, but we know what is happening from data covering imports from Russia by other countries).  

I think Russian economic data will start to deteriorate from now on.  That's if they continue to be published.