Russian economy starts to spin out of control

 I  (and Bloomberg and Trading Economics) can no longer find the MOEX stock exchange index for Russia, or the yield on Russian bonds.  Trading Economics makes an estimate of the index value, but warns it might not be 100% accurate.   An absence of information is invariably a bad sign.  People are happy to share good news, not so much bad news.

Meanwhile, inflation is picking up.  (The central bank of Russia's inflation target is 4%.)

The 2014 inflation was caused by a collapse in the oil price, leading to a plunge in the rouble.  The 2020 spike was of course caused by the invasion of Ukraine, once again leading to a collapse in the rouble.  Given the loss of life and overall casualties among young men, now estimated at over 500,000, and the tightness of the labour market  (real wages are still rising fast--one way Putin is buying off his population), the only surprise is that inflation isn't higher.

Insiders are selling the share market (foreigners can no longer buy or sell Russian shares because of exchange control and American sanctions), while bond yields were trending sharply higher (until the data were no longer available), usually an indication of worsening problems.

The rouble has strengthened moderately from its lows, which seems unsustainable given the inflation build up.  If oil and gas prices start to fall, as happened in 2014, the wheels will come off. 

I don't know whether oil and gas prices will plunge in the short term, but the medium-term future is surely very bleak, given the global growth of EVs.  And the short-term may be no better.  There was no major economic event that caused the 2014 oil price plunge, just a moderate decline in global economic activity.  Given the impending Chinese recession/slowdown, and sluggish recoveries in Europe and the US (?), a near-term plunge in the oil price, comparable to 2014, is surely at least possible.

Note log scale

Note log scale

The rouble's slide continues

 After Russia's invasion of Ukraine, the rouble initially plunged, then recovered sharply after the Bank of Russia imposed exchange controls.  But, since then, it has slid inexorably.  In a currency market where there are exchange controls, the currency is driven by the balance of trade.  The government has stopped publishing trade data.  I suspect many official Russian statistics are massaged by the authorities.  This is one they cannot massage.  

EU oil imports from Russia have nearly halved

 From Trading Economics

This is the volume (in tonnes); the price has also declined, by 30% since April.  Because the pipeline infrastructure isn't set to pump oil to other countries, this means a significant decline in forex revenue for Russia, hence the renewed slump in the rouble. 

As the German Embassy tweeted:

Germany has ended its dependence on Russian energy. Since August 11th, no coal has been imported. Natural gas imports have been reduced from 55% at the beginning of 2022 to zero. Oil imports dropped from 40% to under 20%, and will be phased out by the end of this year.

 No wonder Putin is kite-flying "peace" proposals. 

The Rouble plunges

Over the last couple of days, the rouble has plunged.  As you can see in the chart below, the rouble fell sharply after Russia's invasion of Ukraine.    The Bank of Russia imposed strict exchange controls, and the currency rallied almost as sharply as it fell.  Part of the recent decline is due to the West's price cap on Russian oil.  Part must be due to the obvious evidence that the world economy is slowing, and taking commodity prices with it.  The fall in the rouble will add to inflation in Russia and worsen Putin's political position.  But what new levers can the Bank of Russia pull to push the rouble up again?

Putin's wars have been bad for the rouble