Russia is facing a ‘time bomb’ at the heart of its economy, economist says

[Pelican Press 0]

This is the hidden content, please

• Sign In
• or
• Sign Up

Russia is facing a ‘time *****’ at the heart of its economy, economist says

Russia preventing firms from leaving the nation is an example of how Moscow is breaking down market institutions amid its war in Ukraine, a UChicago professor says. Contributor/Getty Images

Russia is breaking down institutions and “borrowing from the future,” Konstantin Sonin says.

The economist notes Russia is taking measures to exert more control over its economy.

But those actions are hurting Moscow’s economic future, Sonin said.

Russia is dealing with an economic “time *****,” according to one top economist.

Konstantin Sonin, a professor at the University of Chicago Harris School of Public Policy, said he foresaw a dark economic future ahead for Russia. That’s because the war in Ukraine has put Moscow in a position where it needs to exert more control over the economy, leading it to break down key market institutions and “borrow” funds from the future, Sonin wrote in an

This is the hidden content, please

• Sign In
• or
• Sign Up

for Project Syndicate on Friday.

Sonin pointed to a handful of measures Russia has taken to prop up its economy, including implementing

This is the hidden content, please

• Sign In
• or
• Sign Up

on key commodities to counter Western sanctions.

The change has prompted some companies to issue steep price hikes, Sonin said, and it’s an example of market levers breaking down in the nation.

Russia has also taken steps to block firms from leaving the country. Some companies, like Heineken, have been forced to sell their operations in Russia for as

This is the hidden content, please

• Sign In
• or
• Sign Up

.

The Kremlin is also financing the war by “borrowing from the future,” Sonin said, pointing to cuts to key public spending programs, while

This is the hidden content, please

• Sign In
• or
• Sign Up

. The Kremlin is still planning to spend

This is the hidden content, please

• Sign In
• or
• Sign Up

for the next two years, according to plans Russia’s finance ministry published in 2023.

“Even more important, ******’s borrowing from the future takes the form of a gradual, yet pervasive dismantling of the market institutions that the Russian people paid such a high price to acquire during the reforms of the 1990s,” Sonin wrote.

“Investing massively in military production and simultaneously dismantling market institutions may strengthen ******’s hand in the short term, but it sets a time ***** under longer-term economic development.”

Still, Russia’s economy isn’t close to collapse, Sonin noted.

This is the hidden content, please

• Sign In
• or
• Sign Up

is estimated to grow another 3.2% this year, according to the International Monetary Fund, which experts have attributed to Moscow’s hefty war spending.

Yet, Sonin sees a challenging economic future.

“Whenever the Ukraine war ends and Russia returns to international trade (beyond raw materials), all the nationalizations of recent years will come back to haunt it. ******’s war not only imposes on today’s Russians a worse life than they otherwise would have had. It also condemns future generations,” he added.

Story continues

Other forecasters have also warned of

This is the hidden content, please

• Sign In
• or
• Sign Up

in Russia over the long run. While GDP continues to grow, longer-term indicators of economic health are in decline, with the nation suffering from a

This is the hidden content, please

• Sign In
• or
• Sign Up

and

This is the hidden content, please

• Sign In
• or
• Sign Up

more than 3% last year, according to CEIC data.

Read the original article on

This is the hidden content, please

• Sign In
• or
• Sign Up

This is the hidden content, please

• Sign In
• or
• Sign Up

#Russia #facing #time #***** #heart #economy #economist

This is the hidden content, please

• Sign In
• or
• Sign Up

This is the hidden content, please

• Sign In
• or
• Sign Up