While most economists agree that Russia is suffering real damage that will mount over time, the economy — at least on the surface — does not yet appear to be collapsing. The ruble’s initial nosedive in value quickly reversed after the state limited currency transactions, and after Russia’s imports plummeted — an economic picture that can hardly be described as healthy, but one that calmed public fears about a currency crisis. Unemployment hasn’t noticeably surged, and Russia continues to earn the equivalent of billions of dollars every month from oil and gas exports.
In Moscow and St. Petersburg, restaurants and bars remain busy and grocery stores are stocked, even if prices have jumped and some imported goods, such as whiskey, are harder to find. The International Monetary Fund predicts Russia’s economy will contract by 6 percent this year — a sharp fall, but less than the 10 percent or more that some economists were initially forecasting.
To be sure, warning signs are flashing all around, contradicting Russian President Vladimir Putin’s claim that sanctions have failed. Manufacturing of autos and other goods has plummeted because companies can’t import components, creating pockets of disgruntled, furloughed workers in some towns. Airlines have slashed international flights to near zero and are laying off pilots and cannibalizing some planes for parts that they can no longer buy overseas. Thousands of highly educated people have fled the country; hundreds of foreign companies, including Ikea and McDonald’s, are shutting down, and Russia’s federal budget in July showed signs of distress.
Sanctions “are working, definitely, but unfortunately much slower than everybody was expecting six months ago,” said Maxim Mironov, a Russian economist at IE Business School in Madrid.
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