Russia's economy is in trouble

 The chart below shows business confidence and S&P Global's manufacturing PMI.  Both are falling fast, with the PMI lower than it's been since the Covid Crash.

It isn't just these indicators.  The growth rate in industrial production has slumped from a peak of 6.6% in late 2023 to around 1.5% now.  Growth in the volume of retail sales has fallen from 14% in late 2023 to 1.3% now.    GDP growth over the same period has fallen from 6.2% to 1.1%.  And this is after the data have been massaged by the government.

Now is exactly the wrong time to give in to Putin.  It's time to tighten the pressure, to push harder, to force him to withdraw from Ukraine.

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 Russian economy is imploding

From Insider

Five months into the invasion of Ukraine, Russia's economy is imploding from sweeping international sanctions and a corporate exodus, a Yale University analysis has found. The analysis, released July 20, was led by Jeffrey Sonnenfeld, a professor at the Yale School of Management.

The study's findings stand in contrast to studies of Russia's economy that show it's holding up better than expected. Many of those analyses, forecasts, and projections draw from Russian government economic releases, which are becoming "increasingly cherry-picked; partial, and incomplete, selectively tossing out unfavorable statistics while keeping favorable statistics," the Yale team wrote. "Indeed, the Kremlin has a long history of fudging official economic statistics, even prior to the invasion."

Russia's economy has not rebounded and is in fact "reeling," the Yale authors found. They used private Russian-language data sources and sources like high-frequency consumer data for their analysis.

"From our analysis, it becomes clear: business retreats and sanctions are catastrophically crippling the Russian economy," the authors wrote.

One reason Russia appears so resilient is because the Kremlin has been flooding the economy with "artificial liquidity" and propping up the ruble with "draconian capital controls," wrote the Yale team.

In reality, the corporate exodus out of Russia has reversed nearly 30 years worth of foreign investment, as those foreign companies accounted for 40% of the country's GDP, the Yale authors added.

"Putin is resorting to patently unsustainable, dramatic fiscal and monetary intervention to smooth over these structural economic weaknesses, which has already sent his government budget into deficit for the first time in years and drained his foreign reserves even with high energy prices," they wrote.

In April, Russian Finance Minister Anthon Siluanov said the country will draw from its rainy-day fund to cover the deficit. The move, the Yale team wrote, points to a Kremlin that is "fast running out of money, despite intentional obfuscation."

The report's authors call on the international community to keep pressure on Russia over the Ukraine war: "Defeatist headlines arguing that Russia's economy has bounced back are simply not factual — the facts are that, by any metric and on any level, the Russian economy is reeling, and now is not the time to step on the [sanction] brakes."

If the world goes into recession from high oil/commodity prices, the Russian economy will be much weaker than it is even now.

Russian economy imploding

 From Business Insider

Russia's economy is collapsing as exports to the sanctioned country plummet in the face of President Vladimir Putin's ongoing, unprovoked war in Ukraine, trade experts suggest.

The "economy is imploding. We forecast a GDP collapse of -30% by end-2022," Robin Brooks, the chief economist at the Institute of International Finance trade group, tweeted on Sunday.

Brooks added that data compiled with help from Jonathan Pingle, an IIF researcher, indicated that exports from 20 countries to Russia were down 50% in April compared to the same time a year prior.

But monthly exports from Russia to other countries were up 64% in April compared to the same time a year prior, Brooks said on Monday, as oil and gas sales become a bigger part of Moscow's revenue.

Brooks said the country's account surpluses were "massive," which meant Russia was exporting far more than it was importing.

Russia stopped publishing its trade data after invading Ukraine in late February, so Brooks said the data was compiled using 20 of the country's top trading partners.

The Observatory of Economic Complexity said Russia's top trading partners include China and Germany.

Since the invasion, European and Western countries have unveiled a slew of sanctions packages aimed at crippling Russia's economy.

Ukraine's government has routinely lobbied for harsher sanctions and led a push to try to redirect European Union countries away from Russian gas and oil — a main source of Moscow's federal revenue

I'm not convinced by the argument that collapsing imports implies an imploding economy, if the imports are not collapsing because of demand but because of sanctions.  (Imports are usually strongly correlated with domestic economic activity)  Of course, the cessation of imports of vital technologies will eventually lead to economic collapse.   And exports are surging as the oil and gas prices zoom.  

Two things will cut Russian exports: the ever tightening embargo on Russian oil and gas exports by Europe; and the fact that global recession in 2023 will reduce oil demand and with it the oil price.   But even though these forces will eventually be devastating for the Russian economy, so far the downturn has been mild, though I don't doubt it will intensify.   The stock market has rallied, as has the rouble, and though Russia's PMI has fallen, it rebounded in May.  

However, by the end of 2022, the Russian economy will be in dire straits, and it will only fall deeper into recession in 2023.  To date, however, that process has only just begun.