Putin is 'isolating' Russia and threatening its future says expert
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The nation’s economy may lose 15 years of gains after the West hit the country with heavy sanctions, a global banking industry lobby group has claimed. The Institute of International Finance’s (IIF) deputy chief economist has warned Moscow’s economy could be hit with further blows if Europe can wean itself off Russian gas. After President Vladimir Putin ordered his troops to invade Ukraine in February, businesses around the world reassessed their relationship with Russia. Since then, images have emerged of empty shops after international brands pulled out.
Shopping centres in major cities have become “ghost towns” according to some media reports.
Images via Getty show empty shops where brands like Uniqlo, Dior and Adidas used to be.
It isn’t just clothing stores that have left Russia – many food and drink giants also followed suit.
Coca-Cola, Pepsi and Starbucks paused or closed operations in Russia in the face of western sanctions.
Fast food behemoths like KFC, Pizza Hut, Taco Bell, The Habit Burger Grill, and WingStreet worldwide all withdrew – these companies come under the ‘Yum Brands’ umbrella.
McDonald’s closed all 850 restaurants in the country in March – where it says it employs 62,000 people.
The company said in a statement: “The humanitarian crisis caused by the war in Ukraine, and the precipitating unpredictable operating environment, have led McDonald’s to conclude that continued ownership of the business in Russia is no longer tenable.”
Some have been confused in recent months, as while the Russian economy suffers, its currency hasn’t collapsed like many suspected it would.
Last month, the ruble strengthened to levels not seen since 2018.
The currency was outperformed only by the Brazilian Real against the dollar this year, based on a Dow Jones Market Data analysis of 56 currencies.
Commenting on this. Jane Foley, head of foreign-exchange strategy at Rabobank, told the Wall Street Journal: “I wouldn’t have anticipated this.
“But when you put in the capital controls, you’re not looking at something real.”
Many economists believe the performance of the Russian ruble isn’t truly reflective of the reality for Russia’s economy/
Moscow used a series of measures to help rebound the ruble, it has been reported.
Robin Brooks, chief economist at the Institute of International Finance, added: “The list of arguments for not trading the ruble is a long one.
“Do I think this makes sense economically speaking for the ruble to be trading stronger than where it was before the invasion? No.”
Mr Brooks added that Russia “could just liberalise capital flows and this thing would weaken drastically. Of course, they won’t do that.”
While many economists still think Russia’s economy will tank, Putin remains confident that his country will get by.
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Today, he said that no Iron Curtain would fall over the Russian economy despite the sanctions imposed by the west.
He said: “We will not have a closed economy, we have not had one and we will not have one,” Putin told young entrepreneurs in a televised meeting.
“We did not have a closed economy – or rather we did in the Soviet times when we cut ourselves off, created the so-called Iron Curtain, we created it with our own hands. We will not make the same mistake again – our economy will be open.”
Putin added: “A country like Russia cannot be fenced in.”
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