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April 2, 2022 9:59 am

Russia Headed for Recession Despite Ruble Rebound, US Says

avatar by i24 News

A view shows a McDonald’s restaurant in central Moscow, Russia March 9, 2022. Photo: REUTERS/Evgenia Novozhenina

i24 News – Punishing Western sanctions imposed on Moscow for its assault on Kyiv are pushing Russia into recession and turning it back into a closed economy, according to a senior US Treasury official.

Speaking on condition of anonymity, the official told reporters that the Treasury sees Russia as struggling with steep inflation, diminished exports, and shortages despite a recovery of its ruble currency.

The official attributed the recovery to stringent capital controls and foreign exchange curbs, rather than market forces.

Inflation has surged as high as six percent over the past three weeks and is apparently a better indication of the sanctions’ performance in Russia.

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Russia’s currency lost half of its value against the US dollar after the United States and other Western democracies initially imposed sanctions, which froze around half of the Russian central bank’s $630 billion in foreign exchange assets.

It has since recouped its pre-invasion value, reaching a five-week high on Friday before settling in the 83-84 range to the US dollar.

However, the Treasury official said that will not stop a steep contraction in Russia’s economic output that analysts forecast at about 10 percent this year – far worse than the 2.7 percent contraction it suffered during 2020 from Covid.

“The economic consequences Russia is facing are severe: high inflation that will only get higher, and deep recession that will only get deeper,” the official said.

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