### Summary
The Russian stock market's recent gains are a facade and the country's economy is in decline, according to Yale researchers. Russia's frozen foreign assets and the depreciation of the ruble have artificially inflated stock market profits. Additionally, the economy is suffering from a loss of confidence, with people and money fleeing to neighboring countries.
### Facts
- 📉 The Russian stock market's recent gains are an illusion, masking the true state of the country's struggling economy.
- 🧊 Russia has frozen inflows and outflows of foreign assets, preventing investors from cashing out and propping up the stock market.
- 💸 The depreciation of the ruble has artificially inflated the value of Russian stocks, as the country's commodities are sold in foreign currencies.
- 💼 Workers, academics, and oligarchs are leaving Russia, taking with them technical and intellectual capital essential to the country's economy.
- 💔 Trust in President Vladimir Putin and confidence in the Russian economy have eroded, leading to a lack of domestic and foreign investment.
- 🌍 Neighboring countries like Armenia, Georgia, and Kyrgyzstan have become destinations for Russian money and talent fleeing the country.
- 📉 Experts warn that Russia's economy could continue to decline and the country may even become a failed state if the costly war in Ukraine persists.
### Summary
Russia's currency, the ruble, has plunged to a 16-month low, leading to surging prices of sushi due to the country's economic challenges and rift with the West.
### Facts
- 💰 Russia's currency, the ruble, hit a 16-month low last week, as the country's current account suffers from Western sanctions.
- 🍣 Local prices of sushi in Russia are expected to surge by as much as 30% in the coming weeks due to the weakened ruble and strained relations with the West.
- 📈 Russia's official inflation rate reached a five-month high of 4.3% in July, but some economists estimate it to be over 60%.
- 🍱 Restaurateurs in Russia are already facing increased costs of sushi ingredients, such as rice, fish, and seaweed, which are imported and dependent on the dollar exchange rate.
- 💸 The embattled ruble sank past 100 to the dollar, prompting the Russian central bank to raise interest rates significantly.
- 📉 Capital outflows, reduced reliance on Russian oil by European nations, and falling export revenues have added to Russia's economic challenges.
- 🇷🇺 President Vladimir Putin held an emergency meeting to discuss measures for stabilizing the exchange rate, including export restrictions and limits on foreign currency movement.
Russia's stock market is performing well on the surface, but experts believe it is an illusion meant to hide the declining state of Russia's economy, which is likely to continue suffering as long as President Putin remains in power.
Investments in Russia's stock market are deceptive and likely to go nowhere as the country's economy spirals downwards under President Vladimir Putin's rule, according to Yale researchers.
Russian President Vladimir Putin has acknowledged the rising risks of inflation and has urged the government and central bank to keep the situation under control, as soaring prices could pose a threat to living standards and his upcoming re-election bid, while Russia's budget is also strained due to its military operation in Ukraine.
The Russian economy is facing several major issues, including a labor shortage, soaring inflation, a tumbling ruble, the risk of recession, a real estate bubble, and the nationalization of foreign businesses, which could lead to stagnation and a fall in GDP growth in the long term.
Germany's economy stagnated in the second quarter, solidifying its position as one of the world's weakest major economies, with factors including weak purchasing power, thin industrial order books, a slowdown in the Chinese economy, and the impact of aggressive monetary policy tightening contributing to the country's economic struggles.
European policymakers are increasingly concerned about stagflation, as evidence of slowing growth and persistent inflation weighs on their economies, prompting reassessment of interest-rate settings.
Russian President Vladimir Putin acknowledged that inflation in Russia has made it nearly impossible for businesses in the country to plan, but he brushed off longer-term concerns, stating that the problems are not "insurmountable."
The Central Bank of Russia has raised its key lending rate to 13% in an effort to combat inflation and stabilize the struggling ruble, which has weakened significantly against the dollar due to decreased exports and increased imports. The country also faces challenges with low unemployment and a brain drain of talent to other former Soviet states. However, the Russian government remains optimistic about economic growth forecasts for 2023.
Double-digit interest rates and the possibility of further hikes are hitting the Russian economy hard, as the impact of higher industrial production and rising defense spending fade, leading to stagnation or decline in household consumption and investment.
Despite expectations of higher interest rates causing a spike in unemployment and a recession, the Federal Reserve's rate hikes have managed to slow inflation without dire consequences, thanks to factors such as replenished supplies, changes in the job market, and continued consumer and business spending.
The global economy may not be prepared for a worst-case scenario of the US interest rate rising to 7% with stagflation, according to JPMorgan CEO Jamie Dimon, as increased rates and persistent inflation could have detrimental effects on the global economy.
Russia's economy is expected to grow by 1.5% this year, defying previous projections of contraction and proving more resilient than expected to Western sanctions due to rising oil prices and new export markets, though an eventual slowdown is still predicted.
Germany's inflation rate in September slowed to the lowest level since Russia invaded Ukraine, potentially leading the European Central Bank to reconsider its interest rate hikes.
The Russian rouble's decline is causing tensions between the central bank and finance ministry, as inflation rises and growth slows, threatening the country's ability to wage war effectively.
Russia's economy is being increasingly structured around war, with nearly one-third of the country's spending next year devoted to defense, redirecting funds from sectors like health care and education; however, the economic impacts of the war, including inflation and a weakened ruble, are causing concerns for citizens and the government alike.
In September, Russian banks' profits declined due to a slowdown in consumer lending caused by high interest rates, leading to concerns about the impact of further rate increases in the future.